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BP to Spend $227 Million on New Lubricant Facility in China

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BP Plc (BP - Free Report) recently announced its intention to spend $227 million on manufacturing a third facility to blend lubricants in China. The move is in line with the company’s aim to gain traction in the growing market for premium lubricants in the world’s second-largest economy. Importantly, the amount to be invested will be the major outlay by the company for a single blending plant.  

The lubricant unit will likely commence activities before 2021-end. The plant is expected to have a capacity to produce 200,000 tons of lubricants every year. The premium lubricants and greases that will be manufactured at the plant are anticipated to be utilized by automobiles and aviation engines.

London-based BP has rallied 5.2% year to date, outperforming the 3.4% gain of the Zacks Oil International Integrated industry. We appreciate the company’s renewed share repurchase program, which reflects BP’s financial strength on a healthy crude pricing scenario. Moreover, a rising cash balance over the first nine months of 2017 reflects the strength in BP’s financials.



Investors should know that the integrated energy player has an impressive cash flow yield ratio. Companies with strong operations generally have high cash flow yield, indicating that the amount of money investors are generating is more than the amount spent to buy the stock. BP has 14.7% cash flow yield, higher than 14.2% yield of the industry.



Presently, BP sports a Zacks Rank #1 (Strong Buy). Other prospective players in the energy space are China Petroleum & Chemical Corporation , Northern Oil and Gas, Inc. (NOG - Free Report) and ExxonMobil Corporation (XOM - Free Report) . All the stocks flaunt a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.   

Headquartered in Beijing, China Petroleum is a leading integrated energy player. The company will likely witness year-over-year earnings growth of 59.1% in 2017.

Based in Minnetonka, MN, Northern Oil is an upstream energy player. The company’s 2017 revenues are estimated to grow almost 44%.

Headquartered in Irving, TX, ExxonMobil is the largest publicly traded energy firm. The company managed to beat the Zacks Consensus Estimate in three of the last four quarters, the average positive earnings surprise being 8.81%.

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