BP Misses on Q4 Earnings, Plans to Repurchase $2.75B Shares
BP plc BP reported fourth-quarter adjusted earnings of $1.59 per American Depositary Share on a replacement-cost basis, excluding non-operating items. The bottom line missed the Zacks Consensus Estimate of earnings of $1.65 per share but rose from $1.23 reported a year ago.
Total quarterly revenues of $70,356 million surpassed the Zacks Consensus Estimate of $59,505 million. The top line increased from $52,238 million in the year-ago quarter.
Lower-than-expected fourth-quarter results were owing to a decline in refinery throughputs and a fall in oil equivalent production. This was offset partially by higher realizations of commodity prices.
BP p.l.c. Price, Consensus and EPS Surprise
BP p.l.c. price-consensus-eps-surprise-chart | BP p.l.c. Quote
Share Repurchases & Dividend Hike
BP announced plans to execute a $2.75-billion share buyback program, which is expected to be completed before its first-quarter results. It declared a dividend per ordinary share of 6.610 cents for the December quarter, reflecting an increase of 10%.
Operational Performance
Oil Production & Operations:
For the fourth quarter, BP reported total production of 1,309 thousand barrels of oil equivalent per day (MBoe/d), down from 1,358 MBoe/d in the year-ago quarter.
BP sold liquids at $80.43 a barrel in the fourth quarter compared with $71.07 in the prior-year period. It sold natural gas at $10.20 per thousand cubic feet compared with $8.73 in the year-ago quarter. Overall hydrocarbon price realization rose to $74.60 per Boe from $66.19.
After adjusting for non-operating items, underlying replacement cost earnings before interest and tax for the segment amounted to $4,428 million. The figure jumped from earnings of $4,024 million in the year-ago quarter. Higher commodity price realizations primarily caused the upside.
Gas & Low Carbon Energy:
Segmental profits totaled $3,148 million, improving from $2,211 million in the year-ago quarter, primarily led by increased liquid and gas prices.
In the fourth quarter, the total production of 956 MBoe/d decreased from 974 MBoe/d in the year-ago quarter.
Customers & Products:
After adjusting for non-operating items, underlying replacement cost earnings before interest and tax for the segment amounted to $1,902 million, up significantly from $611 million in the year-ago quarter. A significant improvement in refining marker margin aided the segment.
BP-operated refining availability in the December quarter was 95.0%, reflecting a decline from 95.4% in the year-ago quarter. Total refinery throughputs from the fourth quarter were 1,378 thousand barrels per day (MBbl/D), down from 1,644 MBbl/D.
Capex
Organic capital expenditure in the reported quarter was $3,861 million. The company reported total capital spending of $7,369 million for the quarter.
Financials
BP's net debt was $21,422 million at the end of the fourth quarter. Also, the firm announced that its gearing was 20.5%.
Outlook
BP expects upstream production to be almost in line in the March quarter of this year with the December quarter of 2022. For this year, the British energy giant is forecasting both reported and underlying upstream production to match the prior year. BP revealed its capital expenditure guidance of $16 billion to $18 billion for this year.
Zacks Rank & Stocks to Consider
BP currently carries a Zacks Rank #3 (Hold). Better-ranked players in the energy space include Halliburton Company HAL, PBF Energy PBF and Antero Midstream Corporation AM. All the stocks carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Halliburton is well known for providing products and services to energy companies. Over the past 30 days, HAL has witnessed upward earnings estimate revisions for 2023 and 2024, respectively.
In North America, PBF Energy is a leading independent refiner. PBF has lower exposure to debt capital as compared to composite stocks belonging to the industry.
Antero Midstream generates stable cashflows, banking on its midstream assets involved in gathering, compression, processing and fractionation activities. The properties are centered around the prolific Appalachian Basin. Over the past 30 days, Antero Midstream has witnessed upward earnings estimate revisions for 2023.
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