BP plc (NYSE: BP): Q1 Earnings Preview 2011

BP plc (NYSE: BP) is scheduled to release first-quarter earnings before the opening bell on Wednesday, April 27, 2011. Analysts, on average, expect the company to report earnings of $1.89 per share on revenue of $71.40 billion. In the year ago quarter, the company reported earnings of $1.79 per share on revenue of $74.42 billion.

BP p.l.c. provides fuel for transportation, energy for heat and light, retail services, and petrochemicals products. The Company operates in more than 80 countries, providing its customers with fuel for transportation, energy for heat and light, retail services and petrochemicals products.

In the preceding fourth quarter, the London, United Kingdom-based company's net income was $5.57 billion compared to $4.30 billion earned in the same period a year ago. BP’s latest quarterly results included a $1 billion pretax charge related to the Gulf spill, taking total charges booked for the year to $40.9 billion. Adjusted replacement cost profit, which strips out one-time items and changes in the oil price, came in at $4.36 billion. Revenue improved 14% to $83.99 billion despite a 9% year-on-year decline in total oil and gas production.

In the past few months, the company has focused on rebuilding its reputation and implementing various changes to its safety procedures following the worst oil spill in U.S. history.

BP returned to a profit in the third quarter, but it posted a loss of $3.7 billion for 2010, its first in nearly 20 years, as a consequence of the disatrous spill in the Gulf of Mexico. In contrast, BP had a profit of $16.6 billion in 2009BP Chief Executive Officer Robert Dudley has set aside $41 billion to cover cleanup and legal costs from the spill, sold off more than $24 billion in assets and focused the company on exploration. Partly as a result of the asset sales BP expects production to decline to around 3.4 million barrels of oil and gas equivalent a day in 2011, down from 3.67 million in 2010.

At its last earnings call in February, BP Chief Executive Bob Dudley said that while the company would continue to divest noncore assets, mostly in upstream, it would also increase its investment in emerging markets. BP said that it plans to increase its capital expenditure to $20 billion in 2011 from $18.2 billion in 2010.

Recently, the company confirmed that it would restart drilling at 10 existing development and production wells in the Gulf in July. The UK oil group has struck a deal with US regulators, under which it will be allowed to drill 10 existing wells that were under way before the accident and which it needs in order to maintain or increase production on existing platforms. BP has also won deep-water exploration licences in Australia and Angola. In his quest for new sources of long-term growth, Dudley struck two deals in rapid succession: a proposed $16bn share swap and Arctic alliance with Rosneft, the Russian state oil champion, and a partnership with India’s Reliance. However, the Rosneft alliance remains blocked and subject to a dispute with BP’s partners in TNK-BP, its existing Russian oil venture.

Meanwhile, the demand for fossil fuels continued to rebound in recent months on an increase in global economic activity. Crude-oil prices have also broken through $100-a-barrel on jitters tied to supply disruptions in Libya and political strife in the Middle East. Oil prices have advanced 23 percent in New York this year.

The company's stock currently trades at a forward P/E (fye Dec 31, 2012) of 6.93 and PEG ratio (5 yr expected) of 1.41. In terms of stock performance, BP shares have gained nearly 90 percent over the past year.

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BP plc (NYSE: BP): Q4 Earnings Preview 2010

BP plc (NYSE: BP) is scheduled to release fourth-quarter earnings before the market open on Tuesday, February 1, 2011. Analysts, on average, expect the company to report earnings of $1.66 per share on revenue of $68.29 billion.

BP p.l.c. provides fuel for transportation, energy for heat and light, retail services, and petrochemicals products. The Company operates in more than 80 countries, providing its customers with fuel for transportation, energy for heat and light, retail services and petrochemicals products.

In the preceding third quarter, the London, United Kingdom-based company's net income was  $1.8 billion in the third quarter, compared with a loss of $17 billion during the second quarter in the same year. The results reflect a pre-tax charge of $7.7 billion and $39.9 billion respectively related to the Gulf of Mexico oil spill. Adjusted replacement cost profit climbed 18% to $5.5 billion. Total revenues and other income increased 10% to $74.65 billion from $67.86 billion in the same quarter last year. Analysts, on average, expected the company to report a profit of $4.6 billion on revenue of $72.46 billion. 

For the fourth quarter of 2010, the company expects the usual seasonal decline in refining margins. Moreover, the supply and trading contribution is expected to remain weak in the fourth quarter due to continued lack of volatility in the market. BP’s refinery turnaround activities are expected to be higher in the fourth quarter than in the third.

The British oil giant has been rocked since the spill in the Gulf of Mexico, and its problems continued with a recent leak in Alaska. BP took a charge of $40 billion in the second and third quarters to account for costs of the spill. The company is obligated to pay $5 billion a year into the $20 billion fund for victims agreed on with President Barack Obama in June.BP is now working hard to rebuild its shattered reputation. The company has been divesting assets to cover costs linked to the Gulf of Mexico oil spill. According to BP's management, the total cost of the Gulf oil spill has reached $40 billion and the company aims to dispose assets worth $30 billion all over the globe by the end of 2011 to pay for it. The company’s asset disposal program, which is nearing completion, will help it overcome liquidity concerns. So far, BP has sold $22 billion of non-core assets  in Argentina, Colombia, Pakistan, the U.S. and Vietnam. BP interests in Algeria, Alaska’s Prudhoe Bay and Canadian pipelines may be next up on the block, taking the company close to its original goal. Raising funds will help BP to reduce its net debt level to $10–$15 billion by the end of 2011.

According to analysts, BP is likely to bring back a dividend payout and may pledge sales beyond the $30 billion target when it outlines strategy and announces full-year results on February 1. London-based BP suspended its $10 billion annual dividend for the first three quarters of last year, bowing to political pressure in the U.S. and the need to strengthen its balance sheet. 

Recently, BP unveiled a share-swap agreement with Russia's state-controlled OAO Rosneft  that allows it to jointly explore and develop parts of the Russian Arctic. BP said that it was swapping 5% of its own stock for a 9.5% stake in Rosneft. BP already is a key player in Russia’s energy market through its 50% interest in TNK-BP; the country represented a quarter of BP’s output in the third quarter. The deal with Rosneft will allow the two firms to jointly drill in the Arctic Ocean, as Rosneft controls three licenses that cover 125,000 square kilometers on the Russian Arctic ontinental shelf. The two companies have agreed to lock-up provisions for two years.

BP has also acquired stakes in deepwater blocks in the South China Sea over the past six months, as it steps up activity in frontier regions thought to be rich in oil and natural gas. 

Also in January, BP Plc won rights to drill for oil and natural gas in four deepwater exploration areas in Australia. The deal further entrenches BP in Australia, where it operates two refineries, part-owns  the North West Shelf liquefied natural gas project, and has agreed to pipe natural gas from several large discoveries to the A$43 billion dollar (US$42.4 billion) Gorgon liquefied natural gas project being built in Western Australia state.Such bold bets have helped fuel a recovery in BP's shares after the Gulf spill.

The company has also benefited from a rally in oil prices. Oil prices rose 12 percent in the fourth quarter, which likely contributed to sizable gains in fourth-quarter net income.Oil is trading above $90 in the last days. With the economic rebound showing signs of strengthening, oil may go even higher. Projections are that it will hit $100 again in 2011.

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BP Plc (NYSE: BP): Q3 Earnings Preview 2010

BP Plc (NYSE: BP) is scheduled to release its third quarter earnings before the opening bell on Tuesday, November 2, 2010. Analysts, on average, expect the company to report adjusted earnings of $1.53 per share on revenue of $72.46 billion. In the year ago period, the company reported earnings of $1.50 per share on revenue of $67.86 billion.

BP Plc provides fuel for transportation, energy for heat and light, retail services, and petrochemicals products. The company operates through two segments: Exploration and Production, and Refining and Marketing.

In the preceding second quarter, the London, United Kingdom-based company's net loss was $17.15 billion, $5.42 per share, compared to a profit of $4.38 billion, or $1.01 per share, in the year-ago quarter. The company set aside $32.2 billion for costs related to the spill, including $20 billion for an escrow fund announced earlier. Adjusted profit rose to $5 billion from $2.9 billion in the same quarter last year. Revenue increased to $75.87 billion from $56.56 billion in the same quarter last year. 

BP is working hard to rebuild its shattered reputation. The company has been divesting assets to cover costs linked to the Gulf of Mexico oil spill, the worst in U.S. history. At its last earnings call in July, the company also announced its plans to sell assets for up to $30 billion over the next 18 months, primarily in the upstream business. So far, it has sold nearly $11.5 billion worth of assets including the $7 billion sale of onshore gas assets in the U.S., Canada and Egypt to Apache Corp. Earlier this month, Bob Dudley commented that the company is trying to reduce the number of operatorships it holds in the Gulf of Mexico. 

Late in July, the company said that a probe by U.S. Attorney General Eric Holder may lead to suspension of well operating licenses and debarment from government contracts under U.S. pollution law. The ruling will determine the size of the fine under the Clean Water Act, which could run as high as $20 billion.

Bob Dudley, who became BP CEO on October 1, has unveiled a reorganization of BP’s business, announcing the departure of the head of the exploration and production unit, Andy Inglis, and splitting it into three. He also established an independent safety division. Meanwile, the stock has recovered 42 percent since June 29 when it touched a 14-year low of 302 pence in London trading.

BP is likely to benefit from higher crude oil prices. The price of crude in New York trading has gained 10 percent since the end of May to $81 a barrel. Dudley recenty said that if oil prices stay high, the company's performance remains strong and it satisfies obligations from the spill, then BP will be "heading in the right direction" to restore some level of dividend payout. 

Recently, a US Presidential panel appointed to probe the rig blast that led to the spill said  that its contractor Halliburton Co. (NYSE: HAL) knew the cement it was using to seal the oil well in the Gulf of Mexico was unstable. 

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