BP Stock Falters After Earnings on Threat of More Russian Sanctions

Energy

Published: July 29, 2014 8:30 am

Last Updated: April 27, 2020 6:06 pm

BP PLC (NYSE: BP) reported second-quarter 2014 results before markets opened Tuesday. The oil and gas supermajor posted diluted earnings per American Depositary Share (ADS) of $1.09 on revenues of $93.96 billion. In the same period a year ago, the company reported earnings per ADS of $0.64 on revenues of $94.71 billion. Second-quarter results also compare to the Thomson Reuters consensus estimates for earnings per ADS of $1.12. One ADS is equal to six ordinary shares.

BP noted in its quarterly report that further international sanctions against Russia could have a material effect on the company’s “relationship and investment in Rosneft, our business and strategic objectives in Russia, and our financial position and results of operations.” BP’s pretax profit from its stake in Rosneft totaled $1.02 billion on total production of 988 million barrels of oil per day equivalent.

Net profits (which the company calls underlying replacement cost profit) totaled $3.64 billion, up from $2.71 billion in the year-ago quarter.

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Liquids production dropped from 732,000 barrels a day in the second quarter of 2013 to 562,000 barrels a day this year. The realized price per barrel of liquids rose from $94.92 in the year-ago quarter to $96.90. The realized price for natural gas rose from $5.37 per thousand cubic feet to $5.67.

Total production on a barrels of oil equivalent basis totaled 2.13 million barrels a day in the first quarter, slightly higher than the 2.11 million barrels a day produced in the second quarter, down from 2.24 million in the year-ago quarter. BP attributes the decline to the January 2014 conclusion of its concession in Abu Dhabi. The company also expects production to be lower in the third quarter primarily due to seasonal maintenance and turnaround.

Sales of refined products (BP’s downstream business) fell from 3.21 million barrels a day a year ago to 2.85 million barrels this year. The company blamed a “significantly weaker refining environment” and weaker trading performance for the decline.

The company has divested $3.4 billion in assets on its way to a total divestment of $10 billion by the end of next year. BP said it plans to use the after-tax proceeds from these divestments “predominantly for shareholder distributions, with a bias toward share buybacks.”

The consensus estimates for 2014 call for earnings per ADS of $4.74 on revenues of $377.07 billion.

BP’s ADS were down about 1.6% in premarket trading, at $49.85 in a 52-week range of $40.51 to $53.48. Thomson Reuters had a consensus analyst price target of around $52.60 before the report.

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