BP (BP) Beats Q2 Earnings Estimates, Hikes Dividend Payout

·4 min read

BP plc BP reported second-quarter 2021 adjusted earnings of 83 cents per American Depositary Share (ADS) on a replacement cost basis, excluding non-operating items. The bottom line beat the Zacks Consensus Estimate of earnings of 61 cents per share and also turned around from the year-ago loss of $1.98.

Total revenues of $37,598 million increased from $20,776 million in the year-ago quarter and beat the Zacks Consensus Estimate of $34,542 million.

The strong quarterly results were driven by higher realizations of commodity prices.

BP p.l.c. Price, Consensus and EPS Surprise

BP p.l.c. Price, Consensus and EPS Surprise
BP p.l.c. Price, Consensus and EPS Surprise

BP p.l.c. price-consensus-eps-surprise-chart | BP p.l.c. Quote

Dividend Hike & Share Repurchases

The board of directors approved a dividend hike of 4% in the June quarter to 5.46 cents per ordinary share. Before announcing results for the third quarter, the company plans to buy back $1.4 billion worth of shares by utilizing surplus cashflow that was generated through the January-to-June period.

BP’s Operational Performance

Oil Production & Operations:

For the second quarter, total production of 1,245 thousand barrels of oil equivalent per day (MBoe/d) fell from 1,656 MBoe/d in the year-ago quarter.

BP sold liquids at $60.55 a barrel in the second quarter compared with $22.76 in the prior-year period. It sold natural gas at $3.90 per thousand cubic feet compared with $1.03 in the year-ago quarter. Overall price realization rose to $52.47 per Boe from the year-ago level of $19.32.

After adjusting for non-operating items, underlying replacement cost earnings before interest and tax for the segment amounted to $2,242 million. The figure turned around from a loss of $7,713 million in the year-ago quarter. Higher realized commodity prices primarily caused the upside.

Gas & Low Carbon Energy:

Segmental profits totaled $1,240 million against a loss of $814 million in the year-ago quarter, primarily led by considerable contributions from gas marketing and trading activities.

For the second quarter, total production of 875 thousand barrels of oil equivalent per day (MBoe/d) improved from 869 MBoe/d in the year-ago quarter. Key project ramp-ups primarily contributed to production.

Customers & Products:

After adjusting for non-operating items, underlying replacement cost earnings before interest and tax for the segment amounted to $827 million, down from $1,405 million in the year-ago comparable quarter. The segment was hurt by turnaround and maintenance activities in refining operations.

Notably, BP-operated refining availability for the June quarter was reported at 93.5%, reflecting a decline from 95.6% in the year-ago comparable quarter.

Rosneft:

Earnings from the segment amounted to $643 million, comparing favorably with the loss of $124 million in the June quarter of 2020. Higher oil price aided the segment results.

Capex

Organic capital expenditure for the second quarter of 2021 was recorded at $2,511 million. The company reported total capital spending for the quarter of $2,514 million.

Financials

BP's net debt — including leases — was $41,678 million at second quarter-end versus $50,161 million in the prior-year quarter. Gearing was recorded at 30.9% compared with 37.7% in the prior-year quarter.

Outlook

The British energy giant expects oil demand to recover this year on the rolling out of coronavirus vaccines and the relaxation of social-distancing measures. By the second half of next year, the company expects oil demand to recover to pre-pandemic levels.

Owing to the ongoing divestment program, the company expects upstream production to decline year over year in 2021. For 2021, the company reaffirmed its projection for capital spending at around $13 billion.

For the third quarter of this year, BP projects a sequential rise in upstream production on the ramping up of key projects.

Zacks Rank & Stocks to Consider

The company currently has a Zacks Rank #3 (Hold). Meanwhile, a few better-ranked players in the energy space include Whiting Petroleum Corporation WLL, Continental Resources, Inc. CLR and PDC Energy, Inc. PDCE. All the stocks sport a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Whiting Petroleum has witnessed upward earnings estimate revisions for 2021 in the past 30 days.

Continental is expected to witness earnings growth of 256% in 2021.

PDC Energy is likely to see earnings growth of 111.8% in 2021.


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