BP reported earnings and revenue that were far worse than analysts expected Tuesday, with the London-based oil major suffering an EPS decline that was even worse than what giants ExxonMobil and Chevron reported last week due to lower oil and natural gas prices vs. a year earlier.
BP stock fell slightly following results, despite a 10% dividend hike and buyback. Shares flirted with a possible early before reversing lowe.
CVX and XOM reported on Friday that second-quarter sales fell around 30% with profits sinking 50% compared to a year ago.
Crude Oil Prices Above $80
However, while oil and natural gas prices have retreated so far in 2023, U.S. oil futures appear to have reached an inflection point. U.S. crude oil prices have rallied for several weeks, topping $80 a barrel late last week for the first time since mid-April.
U.S. crude futures dipped 0.5% to $81.37 a barrel on Tuesday. On Monday, crude rose 1.5% to $81.80 on Monday, the highest since April. U.S. crude soared 15.8% in July, its best monthly gain since January 2022.
The market is focusing on tighter global supply amid Saudi-led cuts while demand hopes are improving. Odds of a U.S. recession have fallen, while Chinese authorities recently pledged to step up stimulus, bolstering the demand outlook for the world's top crude importer.
Meanwhile, U.S. natural gas futures traded around $2.60 per million British thermal units Monday. Investors anticipate homes and businesses will use less gas as the weather turns cooler in the next two weeks. Natural gas plants generating electricity will see less demand (like other power plants) due to reduced air conditioning use.
BP Stock
BP stock hit 37.75 Tuesday morning before reversing for a 0.9% to 36.98 in afternoon market trade. Shares are working on a 41.38 buy point for a consolidation going back to mid-February. Investors could use a move above the July 24 high of 37.37 as an early entry.
CVX stock and Exxon Mobil fell 1% on Tuesday after both rose 3% on Monday, nearing their 200-day moving averages. Shellalso sank 1% to 61.03 after climbing 1.1% on Monday. SHEL stock is trying to regain a 62.75 buy point after sliding last week, including a 2.9% drop Thursday following mixed Q2 financials.
BP Earnings
Estimates: Analysts expected BP earnings to total $1.21 per share in Q2, down 54% vs. last year, with revenue down 20% to $54.48 billion.
Results: BP earnings came in at 89 cents a share, down 65% vs. a year earlier. Revenue slumped 29% to $48.54 billion.
BP Chief Executive Officer Bernard Looney said in a statement that the second quarter was a "period of significant turnaround activity and weaker margins in our refining business."
Meanwhile, BP's operating cash flow dropped 42% to $6.3 billion in Q1. For the first half of the year, operating cash flow is down 27% to $13.9 billion. The company's surplus cash flow is also now in the negatives, with BP's cash outflow coming in at $269 million over the amount of cash inflow at the end of Q2. BP's surplus cash flow was $6.55 billion a year ago and $2.28 billion in Q1.
However, the company said it completed $2.1 billion in stock buybacks in Q2, up from the $1.75 billion buyback plan announced at the end of Q1. The company also reiterated its commitment to "using 60% of 2023 surplus cash flow for share buybacks."
BP outlined plans for a $1.5 billion stock buyback plan for Q3, along with an unexpected 10% dividend hike.
The company also reported that upstream production in the first half of the year was up 3.4% vs. last year, in line with its earlier forecast of keeping production broadly flat compared to 2022.
In early May, BP reported mixed first-quarter earnings, narrowly missing revenue estimates. BP reported profits falling 13% to $1.66 per share as revenue grew 14% to $56.18 billion.
The company predicted oil prices would be "elevated in the second quarter as the recent decision by OPEC+ to restrict production, combined with strengthening Chinese demand, tightens supply/demand balances."
In early February, BP announced it would dial down aggressive renewables and emission-reduction targets in order to refocus on oil and gas production. The following week, BP stock jumped 20% — a significant snub to ESG messaging.
Please follow Kit Norton on Twitter @KitNorton for more coverage.
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