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BP plc (BP) Q2 Earnings Miss Estimates, Revenues Fall Y/Y
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British energy giant, BP plc (BP - Free Report) reported second-quarter 2016 adjusted earnings of 23 cents per American Depositary Share (ADS) on a replacement cost basis, excluding non-operating items. The bottom line came below the Zacks Consensus Estimate of 26 cents. Also, the bottom line declined from the year-ago earnings of 43 cents.
BP's total revenue was $47,276 million in the quarter, sharply down from the year-ago level of $63,205 million.
Operational Performance
Upstream
For the second quarter, total production came in at 2.090 million barrels of oil equivalent per day (MMBoe/d), down 1.0% year over year.
The company sold liquids for $44.99 per barrel in the second quarter (versus $56.69 in the year-earlier quarter) and natural gas for $2.66 per thousand cubic feet (versus $3.80). Overall price realization fell to $30.63 per Boe from the year-ago level of $40.04 per Boe.
After adjusting for non-operating items and fair value accounting effects, the underlying replacement cost loss before interest and tax for the segment was $29 million. In the comparable year-ago quarter, the segment had generated profits of $494 million.
The results for the reported quarter reflect significantly lower liquids and gas realizations. This was partly offset by lower costs including the benefits of simplification and efficiency activities, lower rig cancellation costs, lower exploration write-offs, and lower depreciation, depletion and amortization expense.
Downstream
Segmental profits decreased to $1,513 million from $1,867 million in the year-ago quarter. The downfall stemmed from the weakest fuels business refining margins since 2010 and an adverse foreign exchange impact.
Refining Marker Margin decreased to $13.8 per barrel from $19.4 in the second quarter of 2015. Total refinery throughput increased to 1,704 thousand barrels per day (MB/d) from 1,656 MB/d in the year-earlier period. Refining availability was 95.7% versus 94.0% in the year-ago period.
Rosneft
The Rosneft segment includes equity-accounted earnings from associates, representing BP’s stake in the former. The segment posted profits of $246.0 million compared with $510.0 million in the year-ago quarter.
Financials
BP's net debt was $30,931 million at the end of second-quarter 2016 compared with $24,830 million in the year-ago quarter. Net debt-to-capitalization ratio was 24.7% versus 18.8% a year ago.
Company Outlook
BP expects third-quarter 2016 production to be lower than the second quarter, reflecting seasonal turnaround and maintenance activity as well as the impact of an outage at the Enterprise Pascagoula gas processing plant in the Gulf of Mexico. In the downstream space, the company expects turnaround activity to remain almost the same as the second quarter. The company also apprehends that refining margins will continue to be under significant pressure.
BP – one of Europe’s leading oil companies by market value – currently carries a Zacks Rank #2 (Buy). Other well-placed stocks from the energy space are Sasol Ltd. (SSL - Free Report) , ReneSola Ltd. (SOL - Free Report) and Dril-Quip, Inc. (DRQ - Free Report) . Each of these stocks sports a Zacks Rank #1 (Strong Buy).
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BP plc (BP) Q2 Earnings Miss Estimates, Revenues Fall Y/Y
British energy giant, BP plc (BP - Free Report) reported second-quarter 2016 adjusted earnings of 23 cents per American Depositary Share (ADS) on a replacement cost basis, excluding non-operating items. The bottom line came below the Zacks Consensus Estimate of 26 cents. Also, the bottom line declined from the year-ago earnings of 43 cents.
BP's total revenue was $47,276 million in the quarter, sharply down from the year-ago level of $63,205 million.
Operational Performance
Upstream
For the second quarter, total production came in at 2.090 million barrels of oil equivalent per day (MMBoe/d), down 1.0% year over year.
The company sold liquids for $44.99 per barrel in the second quarter (versus $56.69 in the year-earlier quarter) and natural gas for $2.66 per thousand cubic feet (versus $3.80). Overall price realization fell to $30.63 per Boe from the year-ago level of $40.04 per Boe.
After adjusting for non-operating items and fair value accounting effects, the underlying replacement cost loss before interest and tax for the segment was $29 million. In the comparable year-ago quarter, the segment had generated profits of $494 million.
The results for the reported quarter reflect significantly lower liquids and gas realizations. This was partly offset by lower costs including the benefits of simplification and efficiency activities, lower rig cancellation costs, lower exploration write-offs, and lower depreciation, depletion and amortization expense.
Downstream
Segmental profits decreased to $1,513 million from $1,867 million in the year-ago quarter. The downfall stemmed from the weakest fuels business refining margins since 2010 and an adverse foreign exchange impact.
Refining Marker Margin decreased to $13.8 per barrel from $19.4 in the second quarter of 2015. Total refinery throughput increased to 1,704 thousand barrels per day (MB/d) from 1,656 MB/d in the year-earlier period. Refining availability was 95.7% versus 94.0% in the year-ago period.
Rosneft
The Rosneft segment includes equity-accounted earnings from associates, representing BP’s stake in the former. The segment posted profits of $246.0 million compared with $510.0 million in the year-ago quarter.
Financials
BP's net debt was $30,931 million at the end of second-quarter 2016 compared with $24,830 million in the year-ago quarter. Net debt-to-capitalization ratio was 24.7% versus 18.8% a year ago.
Company Outlook
BP expects third-quarter 2016 production to be lower than the second quarter, reflecting seasonal turnaround and maintenance activity as well as the impact of an outage at the Enterprise Pascagoula gas processing plant in the Gulf of Mexico. In the downstream space, the company expects turnaround activity to remain almost the same as the second quarter. The company also apprehends that refining margins will continue to be under significant pressure.
BP PLC Price, Consensus and EPS Surprise
BP PLC Price, Consensus and EPS Surprise | BP PLC Quote
Zacks Rank
BP – one of Europe’s leading oil companies by market value – currently carries a Zacks Rank #2 (Buy). Other well-placed stocks from the energy space are Sasol Ltd. (SSL - Free Report) , ReneSola Ltd. (SOL - Free Report) and Dril-Quip, Inc. (DRQ - Free Report) . Each of these stocks sports a Zacks Rank #1 (Strong Buy).
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report >>