British energy giant, BP plc (BP) reported second-quarter 2014 adjusted earnings of $1.18 per American Depositary Share (ADS) on a replacement cost basis, excluding non-operating items. The bottom line fell short of the Zacks Consensus Estimate of $1.20 but improved from the year-ago earnings of 86 cents. A downcast refining environment was responsible for the earnings miss.
BP's total revenue increased marginally to $95,827 million in the quarter from the year-ago level of $95,704 million.
Maintains Dividend
BP maintained its quarterly dividend of 58.5 cents per ADS. The dividend would be paid on Sep19 to ADS holders as of Aug 8.
Production and Price Realization
Total production of 2.106 million barrels of oil equivalent per day (MMBoe/d) was down 6% year over year.
The company sold liquids for $96.90 per barrel in the second quarter (versus $94.92 in the year-earlier quarter) and natural gas for $5.67 per thousand cubic feet (versus $5.37). Overall price realization rose to $64.90 per Boe from the year-ago level of $61.27 per Boe.
Bolstered by higher price realizations and volume, the Upstream segment experienced nearly a 8.6% year-over-year increase in adjusted underlying profit.
Downstream
The Downstream segmental profit fell to $733 million from $1,201 million in the year-ago quarter. The result reflects the impact of a weak petrochemicals business along with a downcast refining environment.
Refining Marker Margin decreased to $15.4 per barrel from $19.1 in the second quarter of 2013. Total refinery throughput decreased to 1,652 thousand barrels per day (MB/d) from 1,708 MB/d in the year-earlier period. Refining availability was 95.3%, flat year over year.
Rosneft
The Rosneft segment includes equity-accounted earnings from associates, representing BP’s stake in the former. The segment posted profits of $1,024.0 million in the reported quarter.
Financials
BP's net debt was $24,399 million at the end of the second quarter compared with $18,217 million a year ago. Net debt-to-capitalization ratio was 15.5% versus 12.3% in the second quarter of 2013. In the reported quarter, BP's total capex was $5,613 million.
Company Outlook
BP expects third-quarter production to be lower than the second quarter primarily due to planned major turnaround activity, mainly in the higher-margin Alaska and Gulf of Mexico regions. However, fuel margins are expected to improve on the back of a lower level of turnarounds. This would be offset by weak petrochemical margins.
Zacks Rank
BP – one of Europe’s leading oil companies by market value currently carries a short-term Zacks Rank #3 (Hold). Some better-ranked stocks in the same sector include Newfield Exploration Co. (NFX), Mid-Con Energy Partners L.P. (MCEP) and Whiting Petroleum Corp. (WLL). All these stocks sport a Zacks Rank #1 (Strong Buy).
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