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BP Q4 Earnings Trump Estimates on Key Upstream Projects

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BP plc BP reported fourth-quarter 2019 adjusted earnings of 76 cents per American Depositary Share (ADS) on a replacement cost basis, excluding non-operating items. The bottom line surpassed the Zacks Consensus Estimate of 65 cents but deteriorated from the year-ago quarter’s $1.04.

Total revenues of $72,170 million declined from $76,885 million in the year-ago quarter and missed the Zacks Consensus Estimate of $80,172 million.

Higher oil equivalent volumes, backed by key upstream projects, primarily contributed to the better-than-expected earnings performance. However, this was partially offset by lower commodity price realizations, declined refinery throughput outside the United States and Europe, and narrower heavy crude oil discounts in the fuels business.

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

Some Energy Majors’ Q4 Performance

BP joins Chevron Corporation CVX in outpacing the Zacks Consensus Estimate in fourth-quarter 2019. Exxon Mobil Corporation (XOM - Free Report) missed the consensus mark due to weaker margins and Royal Dutch Shell plc RDS.A also lagged the same due to commodity price slump.

BP’s Operational Performance


In the fourth quarter, total production of 2.698 million barrels of oil equivalent per day (MMBoe/d) was marginally higher than 2.627 MMBoe/d in the year-ago period. Key upstream projects primarily drove quarterly production volumes. 

The company sold liquids at $55.90 a barrel in the fourth quarter compared with $61.80 in the prior-year period. Moreover, it sold natural gas at $3.12 per thousand cubic feet compared with $4.33 in the year-ago quarter. Overall price realization fell to $36.42 per Boe from the year-ago level of $42.98.

After adjusting for non-operating items and fair value accounting effects, underlying replacement cost profit before interest and tax for the segment amounted to $2,678 million. The figure deteriorated from $3,886 million in the year-ago quarter. Lower realized prices from oil equivalent barrels of liquids primarily caused the downside.  

Notably, total reserve replacement ratio in 2019 was recorded at 57%.


Segmental profits declined to $1,438 million from $2,169 million in the year-ago quarter due to lower refinery throughput outside the United States and Europe.

Refining marker margin of $12.40 per barrel in the fourth quarter was higher than the year-earlier quarter’s $11. Moreover, total refinery throughput increased to 1,847 thousand barrels a day (MBbls/d) from 1,666 MBbls/d in the prior-year quarter. Although the United States and Europe reported higher refinery throughputs, the company’s throughputs were lower in the rest of the world.

Total sales volumes of refined products rose to 6,263 MBbls/d from 5,916 MBbls/d in the year-ago period. Refining availability was 95.7% compared with 95.6% in the year-earlier quarter. The company’s fuels business suffered due to narrower heavy crude oil discounts in the quarter.


Profits from the segment amounted to $412 million, down from $431 million in the year-ago quarter. The decline was primarily caused by lower oil prices. Moreover, total hydrocarbon production in the segment decreased marginally to 1,148 MBoe/d from 1,173 MBoe/d in the prior-year quarter.

Share Repurchase & Dividend

It bought back 184 million ordinary shares in the fourth quarter, which cost the company $1,171 million. Operating cash flow (excluding GoM oil spill payments) — after tax — was recorded at $7.6 billion in fourth-quarter 2019, higher than $7.1 billion in the year-ago period.

It announced a quarterly dividend of 63 cents per ADS, which will be paid on Mar 27 to shareholders of record as of Feb 14. The metric reflects a 2.4% year-over-year increase. Notably, the company paid 61.50 cents per ADS in the fourth quarter.

Oil Spill Costs & Capex

Through 2019, the integrated energy firm made a payment of $2.4 billion, after tax, associated with the oil spill incident in the Gulf of Mexico.

Organic capital expenditure in 2019 was recorded at $15.2 billion, which was near the lower limit of the guided range.


BP's net debt — including leases — was $55,006 million at the end of the fourth quarter, higher than $44,144 million in the prior-year period. Gearing was recorded at 31.1%, up from 30% in the prior-year quarter.    


BP projects a decline in industry refining margins through the March quarter of 2020. It expects gearing to decline in the middle of the 20-30% range this year versus above 30% reported in 2019. In 2020, the company expects Gulf of Mexico oil spill payments to be less than $1 billion.

The Zacks Rank #3 (Hold) company has a divestment target of $10 billion by 2020-end, of which $9.4 billion has been announced. It plans to add another $5 billion worth of assets in the divestment-list by mid-2021. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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