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BP plc

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BP has been gaining on the back of a strong portfolio of upstream projects. Since 2016, the integrated energy company has placed 13 key upstream projects online, including Atoll Phase 1 & Zohr, driving the company’s record first-quarter 2018 production. We appreciate the company’s commitment to return cash to shareholders through dividend payments. The company’s dividend yield of 5.2% is way higher than 1.8% of the S&P 500. However, the oil spill incident of 2010 in the BP-operated Macondo prospect continues to affect the company. Through first-quarter 2018, BP paid a hefty sum of $1.6 billion related to the spill liability. As of Mar 31, 2018, cash balance of BP reduced by 13% to $22.3 billion, while long-term debt stands at $53.2 billion. The cash available is not adequate to cover the debt, reflecting balance sheet weakness. The company’s debt to capital ratio of 34.2% is also higher than that of industry’s 23%.

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