Energy Business

BP Earnings Reflect Gain on Sale of Stake in TNK-BP

Source: courtesy of BP plc
BP PLC (NYSE: BP) reported first-quarter 2013 results before markets opened this morning. The oil and gas supermajor posted diluted earnings per American Depositary Share (ADS) of $5.20 on revenues of $94.11 billion. In the same period a year ago, the company reported earnings per ADS of $1.51 on revenues of $94.88 billion. First-quarter results also compare to the Thomson Reuters consensus estimates for earnings per ADS of $1.01 and $68.54 billion in revenues. One ADS is equal to six ordinary shares.

Net profits (which the company calls replacement cost profit) include $12.5 billion the company received for the sale of its stake in TNK-BP. On an unadjusted basis, or underlying replacement cost profit, BP posted earnings per ADS of $1.32 for the quarter.

Liquids production was 21,000 barrels a day higher than fourth-quarter production, but 55,000 barrels a day below first quarter 2012 production. The realized price per barrel of liquids also fell, from $108.13 in the year-ago quarter to $103.11. The realized price for natural gas rose from $4.68 per thousand cubic feet to $5.52.

Total production on a barrels of oil equivalent basis totaled 2.33 million barrels a day in the first quarter, slightly higher than the 2.29 million barrels a day produced in the fourth quarter, but 122,000 barrels a day below production in the first quarter of last year.

Sales of refined products (BP’s downstream business) fell by 237,000 barrels a day sequentially and by 70,000 barrels a day year-over-year.

The company’s CEO said:

These strong first quarter results demonstrate the progress BP is making in delivering the performance milestones that support our 10-point plan and underpin our commitment to material operating cash flow growth by 2014.

The early completion of the sale of our interest in TNK-BP has also allowed us to begin a share buy-back programme which we expect to return up to $8 billion to our shareholders and reflects the reduction in BP’s asset base following our divestment programme over the past three years.

The downstream segment’s adjusted net income for the quarter totaled $1.64 billion, up sequentially from $1.39 billion and up from $927 million in the year-ago quarter.

BP said that lower production in the first quarter was primarily due to divestments and the company expects production in the second quarter is expected to be lower due to maintenance activities in the Gulf of Mexico and the North Sea, as well as ongoing impacts from divestment.

The consensus estimates for 2013 call for earnings per ADS of $4.80 on revenues of $328.53 billion. For the second quarter, the estimate calls for earnings per ADS of $1.23 on revenues of $62.35 billion.

BP’s ADS are up about 3.3% in premarket trading, at $42.63 in a 52-week range of $36.25 to $45.45. Thomson Reuters had a consensus analyst price target of around $50.80 before today’s report.

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