British energy giant, BP plc (BP) reported fourth-quarter 2014 adjusted earnings of 74 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 82 cents and decreased from the year-ago earnings of 90 cents.
BP's total revenue was $75,096 million in the quarter, down from the year-ago level of $95,096 million.
Full-year 2014 adjusted earnings came in at $3.96 per ADS on a replacement cost basis, ahead of the Zacks Consensus Estimate of $3.74 per ADS. However, the full-year figure experienced a year-over-year downfall from $4.26 in 2013. Total revenue decreased to $358.7 billion in 2014 from $396.2 billion in the prior year.
Production and Price Realization
Total production of 2.187 million barrels of oil equivalent per day (MMBoe/d) was down 2.6% year over year.
The company sold liquids for $69.03 per barrel in the fourth quarter (versus $98.26 in the year-earlier quarter) and natural gas for $5.54 per thousand cubic feet (versus $5.49). Overall price realization fell to $51.53 per Boe from the year-ago level of $65.04 per Boe. Affected by lower oil price realizations, the Upstream segment experienced nearly a 41.7% year-over-year decrease in adjusted underlying profit.
Downstream
Segmental profit rose to $1,213 million from $70 million in the year-ago quarter. The improvement came on the back of a stronger refining environment as well as higher contribution from supply and trading activities.
Refining Marker Margin increased to $13.0 per barrel from $11.0 in the fourth quarter of 2013. Total refinery throughput increased to 1,782 thousand barrels per day (MB/d) from 1,695 MB/d in the year-earlier quarter. Refining availability was 94.8% versus 95.6% 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 $470.0 million in the reported quarter.
Financials
BP's net debt was $22,646 million at the end of the fourth quarter compared with $25,195 million a year ago. Net debt-to-capitalization ratio was 16.7% versus 16.2% in the fourth quarter of 2013. In the reported quarter, BP's total capex was $6,734 million.
Company Outlook
BP expects production for full-year 2015 to be higher than 2014. The company also expects first-quarter 2015 production to be higher than the fourth quarter, mainly reflecting increased entitlements on the basis of assumed lower oil prices.
Looking to 2015, the company anticipates a weaker refining environment due to narrowing crude differentials in the low crude price environment. It expects the financial impact of refinery turnarounds to remain at similar levels as 2014 and the petrochemicals margin environment to gradually improve.
Zacks Rank
BP – one of Europe’s leading oil companies by market value – currently carries a short-term Zacks Rank #5 (Strong Sell). For investors interested in the same sector, better-ranked stocks include Golar LNG Partners LP (GMLP), Transocean Partners LLC (RIGP) and World Fuel Services Corp. (INT). All of these have a Zacks Rank #1 (Strong Buy) and appear more rewarding for the short term.
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