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BP Rises 3.5% on Earnings Beat in Q2, Ups Share Buybacks

·5-min read

BP plc BP shares have gained 3.8% since reporting strong second-quarter 2022 earnings on Aug 2, before the opening bell. The outperformance can be attributed to the company’s second-quarter earnings beating the Zacks Consensus Estimate, and the hike in both dividends and buybacks.

BP reported second-quarter 2022 adjusted earnings of $2.61 per American Depositary Share (“ADS”) on a replacement-cost basis, excluding non-operating items. The bottom line beat the Zacks Consensus Estimate of earnings of $2.20 per share and rose from 83 cents reported a year ago.

Total quarterly revenues of $69,506 million surpassed the Zacks Consensus Estimate of $52,891 million. The top line increased from $37,598 million in the year-ago quarter.

Strong quarterly earnings were driven by higher production and realizations of commodity prices.

BP p.l.c. Price, Consensus and EPS Surprise

 

BP p.l.c. Price, Consensus and EPS Surprise
BP p.l.c. Price, Consensus and EPS Surprise

BP p.l.c. price-consensus-eps-surprise-chart | BP p.l.c. Quote

Dividend Hike & Share Repurchases

BP increased its interim dividend payout to shareholders by 10% year over year to 6.006 cents per ordinary share. The dividend will be paid out on Sept 23, 2022, to shareholders of record as of Aug 12, 2022.

Moreover, the company announced plans to execute a $3.5-billion share buyback, which is expected to complete before reporting the third-quarter results. BP anticipates buying back $1 billion worth of shares every quarter, considering Brent crude price at $60 per barrel.

Operational Performance

Oil Production & Operations:

For the second quarter, BP reported total production of 1,274 thousand barrels of oil equivalent per day (MBoe/d), up from 1,245 MBoe/d in the year-ago quarter.

BP sold liquids at $100.34 a barrel in the second quarter compared with $60.55 in the prior-year period. It sold natural gas at $7.97 per thousand cubic feet compared with $3.90 in the year-ago quarter. Overall price realization rose to $87.46 per Boe from the year-ago level of $52.47.

After adjusting for non-operating items, underlying replacement cost earnings before interest and tax for the segment amounted to $5,902 million. The figure jumped from earnings of $2,242 million in the year-ago quarter. Higher commodity price realizations primarily caused the upside.

Gas & Low Carbon Energy:

Segmental profits totaled $3,080 million, improving from earnings of $1,240 million in the year-ago quarter, primarily led by increased oil-equivalent production and prices.

In the second quarter, the total production of 924 thousand barrels of MBoe/d improved from 875 MBoe/d in the year-ago quarter. Key project start-ups primarily contributed to the production.

Customers & Products:

After adjusting for non-operating items, underlying replacement cost earnings before interest and tax for the segment amounted to $4,006 million, up significantly from $827 million in the year-ago quarter. A favorable refining business and an exceptional oil trading contribution aided the segment.

BP-operated refining availability at the June-end quarter was 94.4%, reflecting an increase from 94.1% in the year-ago quarter. Total refinery throughputs from the second quarter were reported at 1,480 thousand barrels per day (MBbl/D), declining from 1,507 MBbl/D in the prior-year quarter.

Capex

Organic capital expenditure for the reported quarter was $2,845 million. The company reported total capital spending for the quarter at $2,838 million.

Financials

BP's net debt, including leases, was $30,886 million at the end of the second quarter versus $41,678 million in the prior-year quarter. Gearing was 27.5% compared with 30.9% in the prior-year quarter.

Outlook

BP expects upstream production to remain flat year over year in 2022. The company reiterated its capital expenditure guidance of $14-15 billion for the year.

BP expects to receive $2-3 billion of divestment and other proceeds this year. Against a target of $25 billion of divestment and other proceeds between the second half of 2020 and 2025, BP has received $14.7 billion of proceeds so far.

The company anticipates oil and gas prices to remain high in the third quarter due to the ongoing supply disruptions resulting from the Russia-Ukraine conflict. Hence, it expects industry refining margins to remain elevated in the third quarter.

Zacks Rank & Other Key Picks

BP currently sports a Zacks Rank #1 (Strong Buy). Investors interested in the energy sector might look at the following companies that also presently flaunt a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.

Exxon Mobil Corporation XOM reported second-quarter 2022 earnings per share of $4.14 (excluding identified items), beating the Zacks Consensus Estimate of $3.80. Strong earnings were driven by higher realized commodity prices and solid refinery utilization.

ExxonMobil has witnessed upward earnings estimate revisions for 2022 and 2023 in the past 30 days. The company currently has a Zacks Style Score of A for Growth and Momentum, and B for Value. XOM is expected to see earnings growth of 131% for 2022.

TotalEnergies SE TTE reported second-quarter 2022 operating earnings of $3.75 per share, meeting the Zacks Consensus Estimate. The outperformance resulted from an increase in commodity prices.

TotalEnergies has witnessed upward earnings estimate revisions for 2022 and 2023 in the past 30 days. The company currently has a Zacks Style Score of A for Value and Growth. TTE is expected to see earnings growth of 107% in 2022.

PBF Energy Inc. PBF reported second-quarter earnings of $10.58 per share, comfortably beating the Zacks Consensus Estimate of earnings of $7.36. The strong quarterly results were driven by increased contributions from the Refining segment.

PBF Energy has witnessed upward earnings estimate revisions for 2022 and 2023 in the past 30 days. The company currently has a Zacks Style Score of A for Value, Growth and Momentum. PBF is expected to see earnings growth of 764.4% in 2022.


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