BP (BP) beats second quarter earnings estimates and increases dividend payout – August 3, 2021
BP plc (PA – Free Report) reported adjusted earnings of 83 cents per American Depositary Share (ADS) in the second quarter of 2021 based on replacement cost, excluding non-operating items. The net result beat Zacks’ consensus earnings estimate of 61 cents per share and also reversed from the $ 1.98 loss a year ago.
Total revenue of $ 37,598 million increased from $ 20,776 million in the quarter last year and exceeded Zacks’ consensus estimate of $ 34,542 million.
Strong quarterly results were driven by higher achievements in commodity prices.
Increase in dividends and share buybacks
The board of directors approved a 4% dividend increase in the June quarter to 5.46 cents per common share. Before announcing third quarter results, the company plans to repurchase $ 1.4 billion of shares using the excess cash flow generated during the January to June period.
BP operational performance
Oil production and operations:
For the second quarter, total production of 1,245,000 barrels of oil equivalent per day (MBoe / d) was down from 1,656 MBoe / d in the previous year‘s quarter.
BP sold liquids at $ 60.55 a barrel in the second quarter, up from $ 22.76 in the prior year period. It sold natural gas at $ 3.90 per thousand cubic feet, up from $ 1.03 in the last year’s quarter. Overall price realization reached $ 52.47 per boe, up from $ 19.32 a year ago.
After adjusting for non-operating items, underlying replacement cost profit before interest and taxes for the industry was $ 2,242 million. The figure was reversed after a loss of $ 7,713 million in the quarter of last year. The main reason for the increase was higher realized commodity prices.
Low carbon gas and energy:
Segment profits totaled $ 1,240 million compared to a loss of $ 814 million in the last quarter, mainly due to sizable contributions from gas marketing and trading activities.
For the second quarter, total production of 875,000 barrels of oil equivalent per day (MBoe / d) improved from 869 Mboe / d in the previous year’s quarter. The ramp-ups of key projects mainly contributed to production.
Customers and products:
After adjusting for non-operating items, underlying replacement cost profit before interest and taxes for the industry was $ 827 million, down from $ 1,405 million in the same quarter of the year. Previous exercice. The segment was penalized by turnaround and maintenance activities in refining operations.
Notably, the availability of refining operated by BP for the June quarter was reported at 93.5%, reflecting a decrease from 95.6% in the comparable quarter last year.
Segment profit was $ 643 million, comparing favorably to the loss of $ 124 million in the June 2020 quarter. Rising oil prices helped segment results.
Organic capital spending for the second quarter of 2021 was recorded at $ 2,511 million. The company reported total capital expenditures for the quarter of $ 2,514 million.
BP’s net debt, including leases, stood at $ 41,678 million at the end of the second quarter, compared to $ 50,161 million in the previous year quarter. Gearing was recorded at 30.9% against 37.7% in the quarter of the previous year.
The British energy giant expects demand for oil to pick up this year thanks to the rollout of coronavirus vaccines and the easing of social distancing measures. By the second half of next year, the company expects demand for oil to return to pre-pandemic levels.
Due to the ongoing divestment program, the company expects upstream production to decline year over year in 2021. For 2021, the company reaffirmed its capital expenditure projection of around 13 billions of dollars.
For the third quarter of this year, BP expects a sequential increase in upstream production on the ramp-up of key projects.
Zacks ranking and actions to take into account
The company currently has a Zacks Rank # 3 (Hold). Meanwhile, a few higher ranked players in the energy field include Whiting Oil Company (CMU – Free report), Continental Resources, Inc. (CLR – Free report) and PDC Energy, Inc. (PDCE – Free report). All stocks have a Zacks rank 1 (strong buy). You can see The full list of today’s Zacks # 1 Rank stocks here.
Whiting Petroleum has seen upward revisions to earnings estimates for 2021 over the past 30 days.
Continental is expected to experience 256% profit growth in 2021.
PDC Energy is expected to experience 111.8% profit growth in 2021.