BP beats second quarter profit forecasts as oil output increases
Oil major BP posted better than expected results for the three-month stretch to the end of June on the back of higher oil output, despite a decline in crude prices versus a year ago.
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In the second quarter, underlying replacement cost profit printed at $2.8bn, which was "similar" to the year ago level but ahead of the $2.562bn anticipated by UBS analyst Jon Rigby and ahead of even the highest analyst estimate as compiled by Bloomberg.
On a reported basis, average oil and gas output increased by approximately 4.0% versus a year earlier to reach 3.8m barrels a day of oil equivalent.
"At the midpoint of our five-year plan, BP is right on target. Reliable performance and disciplined growth across our businesses are delivering strong earnings, cash flow and returns to shareholders," said BP chief Bob Dudley.
"And this is also allowing us to grow businesses that can make a significant contribution in the energy transition, helping deliver the energy the world needs with lower carbon."
However, the quarterly dividend was kept at 10.25 US cents a share instead of being increased to 10.50 cents as UBS had forecast.
Net debt as at 30 June 2019 stood at $46.5bn, versus $38.7bn one year ago, leaving the oil outfits gearing at 31.0%, which was up from 27.5% one year ago.
Ahead of the company's latest update, Rigby had told clients: "Although gearing is not intrinsically a concern it does leave BP something of an outlier among its peers and we worry that if it isn’t able to bring this down quickly through divestments it may impact investor sentiment and also restrict strategic optionality through a period of significant change in the industry."
Interactive Investor's head of markets, Richard Hunter, took a more positive view, telling clients: "BP's strategy is a marathon, not a sprint, and this latest update shows that the company remains reassuringly on track."
In particular, Hunter highlighted the company's beat on the bottom line, "prodigious" cash flow, and 6.1% dividend yield.
As well, during the quarter, BP made its final payment for the acquisition of BHP and the Gulf of Mexico oil spill payment "are now well within the manageable range", Hunter added.
-- More to follow --