BP Q3 Earnings Miss Estimates, Revenues Fall Year Over Year
BP plc BP reported third-quarter 2023 adjusted earnings of $1.15 per American Depositary Share on a replacement-cost basis, excluding non-operating items. The bottom line missed the Zacks Consensus Estimate of $1.37 and declined from $2.59 reported a year ago.
Total quarterly revenues of $54,016 million lagged the Zacks Consensus Estimate of $66,288 million. The top line also declined from $57,809 million reported in the year-ago quarter.
Weak quarterly results primarily resulted from lower realizations of commodity prices and a decline in refinery throughputs.
BP p.l.c. Price, Consensus and EPS Surprise
BP p.l.c. price-consensus-eps-surprise-chart | BP p.l.c. Quote
Share Repurchases
The company plans to execute a $1.5-billion share buyback program, which is expected to be completed before its fourth-quarter results.
Operational Performance
Oil Production & Operations:
For the third quarter, BP reported a total production of 1,382 thousand barrels of oil-equivalent per day (MBoe/d), up from 1,317 MBoe/d recorded in the year-ago quarter. The metric also beat our estimate of 1,369 MBoe/d.
BP sold liquids at $71.10 per barrel in the third quarter compared with $93.14 in the prior-year period. It sold natural gas at $3.44 per thousand cubic feet compared with $12.12 in the year-ago quarter. Overall hydrocarbon price realization declined to $56.76 per Boe from $86.83.
After adjusting for non-operating items, underlying replacement cost earnings before interest and tax for the segment amounted to $3,136 million. The figure declined from $5,211 million recorded in the year-ago quarter and missed our estimate of $3,234.2 million. The downside was primarily due to lower commodity price realizations.
Gas & Low Carbon Energy:
Segmental profits totaled $1,256 million, significantly down from $6,240 million registered in the year-ago quarter, primarily due to lower liquid and gas prices. The figure also missed our projection of $2,677.3 million.
In the third quarter, total production of 946 MBoe/d declined from 981 MBoe/d reported in the year-ago quarter.
Customers & Products:
After adjusting for non-operating items, underlying replacement cost earnings before interest and tax for the segment amounted to $2,055 million, down from $2,725 million recorded in the year-ago quarter. The figure also missed our projection of $2,328.1 million. A significant decline in refining marker margin affected the segment.
BP-operated refining availability in the September-end quarter was 96.3%, indicating an increase from 94.3% registered in the year-ago quarter.
Total refinery throughputs from the third quarter were 1,450 thousand barrels per day (MBbl/D), down from 1,512 MBbl/D recorded in the corresponding period of 2022. The figure also missed our estimate of 1,586.3 MBbl/D.
Capex
Organic capital expenditure in the reported quarter totaled $3,597 million. The company reported total capital spending of $3,603 million for the quarter.
Financials
BP's net debt was $22,324 million at the end of the third quarter. Also, the firm announced gearing of 20.3%.
Outlook
In the fourth quarter, BP expects upstream production to be flat sequentially.
For this year, the British energy giant forecasted both reported and underlying upstream production to be higher than the previous year’s level. BP expects capital expenditure of $16 billion for 2023, including inorganic capital expenditure.
BP expects to receive divestment and other proceeds of $2-$3 billion in 2023, and reach $25 billion between the second half of 2020 and 2025.
Zacks Rank & Stocks to Consider
BP currently carries a Zacks Rank #3 (Hold).
Some better-ranked players in the energy sector are Liberty Energy Inc. LBRT and Matador Resources Company MTDR, both currently sporting a Zacks Rank #1 (Strong Buy), and APA Corporation APA, carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Liberty reported third-quarter 2023 earnings of 85 cents per share, which beat the Zacks Consensus Estimate of 74 cents. The Denver-CO-based oil and gas equipment company’s outperformance reflects the impacts of strong execution and increased service pricing.
Liberty’s board of directors announced a cash dividend of 7 cents per common share, payable on Dec 20, 2023, to stockholders of record as of Dec 6, 2023. The dividend increased 40% from the previous quarter’s level.
Matador Resources reported third-quarter 2023 adjusted earnings of $1.86 per share, which beat the Zacks Consensus Estimate of $1.59. MTDR’s milestone led to better-than-expected third-quarter results, with the highest-ever total production averaging more than 135,000 barrels of oil and natural gas equivalent per day.
For the fourth quarter of 2023, MTDR expects an average daily oil equivalent production of 145,000 BOE. The recent guidance indicates a 2% upward revision from the previously mentioned 143,000 BOE/D.
APA released supplemental information regarding its financial and operational results for the third quarter of 2023. The company expects its quarterly total adjusted production and adjusted oil production to be in the upper half of its guidance range. This can be mainly attributed to strong Permian oil and U.K. North Sea volumes.
APA expects adjusted production and adjusted oil production figures to fall within the upper half of its guided range. The company anticipates adjusted production in the range of 337-339 Mboe/d and adjusted oil production in the band of 159-161 Mboe/d. It is scheduled to release third-quarter results on Nov 1.
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