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BP was downgraded to underweight from neutral at JPMorgan
BP was downgraded to underweight from neutral at JPMorgan, following the oil major’s third-quarter results. “This year is revealing BP’s cashflows as increasingly leveraged to wider standard deviation variables – notably trading and working cap,” said analysts led by Christyan Malek. Its price target was cut to 550 pence ($40.02 per U.S. listed share) from 615 pence, and the analysts said they have a clear preference for Shell SHEL and TotalEnergies TTE. The analysts also say there’s the potential for further, renewables-led clearing of the decks, as well as the rise the fourth-quarter buyback may be scaled down to $1 billion.
BP misses Q3 top and bottom line estimates; extends share buyback
Oct. 31, 2023 3:30 AM ETBP p.l.c. (BP), BPAQFBy: Meghavi Singh, SA News Editor
BP (NYSE:BP) reported weaker than expected profits of $3.3B for the Q3 after a large drop in energy prices from a year ago, and the company extended its $1.5 billion share repurchase programme.
Q3 Non-GAAP EPADS of $1.15 misses by $0.19.
Revenue of $54.02B (-6.6% Y/Y) misses by $2.64B.
It also announced a further $1.5 billion share buyback.
Operating cash flow $8.7B; Net debt reduced to $22.3B.
Capital expenditure in the third quarter was $3.6 billion.
Outlook: bp now expects capital expenditure, including inorganic capital expenditure to be around $16 billion in 2023.
4Q23 guidance: Looking ahead, we expect fourth-quarter 2023 reported upstream production to be broadly flat compared to third-quarter 2023.
2023 guidance: bp expects both reported and underlying upstream production to be higher compared with 2022.
bp continues to expect four major project start-ups during 2023.
bp continues to expect the depreciation, depletion and amortization to be slightly above 2022.
bp continues to expect the underlying ETR for 2023 to be around 40%.
For 2023 bp continues to intend to allocate 40% of surplus cash flow to further strengthen the balance sheet.
bp continues to expect to be able to deliver share buybacks of around $4.0 billion per annum, at the lower end of its $14-18 billion capital expenditure range, and have capacity for an annual increase in the dividend per ordinary share of around 4%.
bp has increased its 2030 Adjusted EBITDA aims for resilient hydrocarbons and group by $2 billion to a range of $41-44 billion and $53-58 billion respectively
9th October 2023
OPEC said it expected world demand to reach 116 million barrels per day (bpd) by 2045, roughly 6 million more barrels per day than it predicted this time last year.
IEA have a consistent historical record of incorrect predictions. They move the peak oil horizon periodically on narrow data.
https://www.cnbc.com/2023/10/09/oil-opec-raises-global-crude-demand-outlook-through-to-2045.html
I have more faith in Opec's global database.
Afternoon all
Hi Ninni
Not sure if this is of any assistance its by Rogue trader on YouTube. He is an amateur analysis who with many videos.
Below are two videos on BP from a couple of years ago. The first gives a really helpful, detailed analysis of BP’s integrated energy strategy and the second an update regarding BP's Rosneft stake.
Both slightly dated but interesting.
https://youtu.be/VpqcPab73DE?feature=shared
https://youtu.be/Lq81xD8b7O0?feature=shared
Good afternoon all
Oil drifting at the moment. With no invasion expected before Biden's visit tomorrow to Israel is over. My attention is on the API inventory data this afternoon. I expect a reversal of last weeks build to a sizable draw this week. May be the trigger to higher poo.
Have a great day all
Mark
Theaky
I recommend ignoring ignorance and not validating their posts with responses.
On topic, I'm glad your recent BP top up is now in a profit after a temporary drop in share price and I hope your worry of possibly being duped by a particular ramper has receded. Lol !!
Market volatility can be frustrating.
It makes you wonder where the vested interests are!!!!
Have a great day !!
Morning Clued
With an 80p increase in the last 12 weeks, a positive reaction to CMD, a resilient oil price, results still to come, 600+ by year end seems achievable. Of course there are always the unknowns.
To quote Donald Rumsfield
"There are known knowns. These are things we know that we know. There are known unknowns. That is to say, there are things that we know we don't know. But there are also unknown unknowns. There are things we don't know we don't know.
Sums up investing nicely.
Later today ( 16.00 ) we have the official inventory data from the EIA. I expect a temporary market reaction as with the API data yesterday. Again, nothing to be concerned about.
Morning Spights and all
It seems the market has shrugged off the API data as an anomaly in the trend. A month or so back this type of data would have crashed the price of oil along with oil equities.
It seems that not many are willing to risk shorting oil with the current actual supply and demand trend and geopolitical events.
A positive response by analysts to BP's capital markets day as well. We know Barclays uber-bullish response. Here, in brief is Citibanks analysis.
BP's (NYSE:BP) earnings growth path looks stronger than European peers and ranks alongside the faster pace of U.S. peers, Citi analysts wrote Wednesday in maintaining its Buy rating on the stock following the company's investor update.
BP (BP) raised its upstream earnings forecast through 2030 by 5%, "which while hardly material proves the company now runs its oil and gas business with longevity in mind, contrasting with the 2020 strategy, which called for shrinkage of that business," Citi said.
"We think all this shakes out in an earnings growth story that is somewhere above 3% per annum 2022-27," the bank said.
BP's (BP) upsized guidance continues to widen the gap to consensus, but the jury is still out on its medium-term trajectory, RBC analyst Biraj Borkhataria said.
The company's last EBITDA guidance range upgrade was to $51B-$56B compared with consensus at the time of ~$38B, which has since climbed to $41.2B, and as BP (BP) has now raised its guidance to $53B-$58B, "the initial gap [had] started to shrink, but clearly BP has raised its ambitions once more and there remains a sizable gap to the targets."
However, "whether BP can convince analysts and investors on its medium-term trajectory remains to be seen," the analyst said while still maintaining his Outperform rating.
Have s great day all
Mark
Evening all
"One week should not make a panic, but it always does"
Spot on meoryou.
How many times is this same market game played on one week's partial data. I expect headlines of 'demand destruction' or 'oil price crash' will be forgotten and builds reversed in a week or so. I would also expect a more extreme fall in the oil price if this massive crude build data had validity.
Contrary to the API data, GasBuddy data on sales on US forecourts shows a strong start to this week for US gasoline demand. Weekly sales are up 2.8% from last week and 5.4% above the four week average.
So little sign of demand destruction in the real world.
The distortion to the inventory data will probably continue until maintenance season is over. I don't see any reason to be concerned.
Afternoon all
BP Capital markets day today.
A positive Proactive article below.
BP worth double suggests Barclays ahead of capital markets day
BP's upcoming capital markets day (October 10) is likely to focus on upstream and low-carbon businesses rather than financials, according to Barclays.
Highlighting how the mood has changed since the last CMD in 2020 (and how much the crude price has recovered following Covid and the Ukraine war), Barclays points out that at the time BP was valued less than renewables giant Orsted but not anymore.
Barclays has five questions for the CMD: What is the longevity of the current upstream portfolio? Why are assets that were previously to be divested now core to the strategy? How significant is the digital productivity advantage? What was learnt from the low carbon journey of the past three years? and can capex really be kept under control?
“There are many other questions we could ask about Rosneft (LSE:ROSN) (Russia) and the downstream challenges, for example, but we see these as relatively minor issues for the investment case,” said the bank, which notes also that BP was the only European company in the last 12 months to deliver reduced opex upstream
Overall, Barclays says BP’s free cash flow (even at US$60 per barrel) supports a share price of 1,000p or 94% higher than now.
"(BP can) grow dividends by 10% a year to 2025 with the high net debt starting point meaning excess free cash flow will be prioritised for debt reduction.
"The company is a leader on sustainability metrics, has one of the most profitable mobility businesses and is high grading the upstream, while on valuation it has one of highest FCF (free cash flow) yields of the sector."
'Overweight' is the investment rating.
Back in the real world:-
August air passenger traffic up 28% and now operating at 96% of August 2019 level.
Booming world air travel global August revenue passenger kilometers (RPKs) were up 28.4%. Domestic travel increased 25% Year on year international travel showed a 30% increase. Global air travel near 2019 level and USA 9.2% higher
Latest OPEC's forecast implies a supply-demand deficit of about 3.3mbd, upcoming supply squeeze is evident.
Opec+ see record 'GLOBAL' oil demand going forward.
I guess the price of oil crashing partly due to one questionable piece of contradictory data from a US government energy department agency is justified. Surely the US government wouldn't want that would they ?
Good morning all
You have to be amused by how frustration with the temporary performance of an investment can turn to illogical scapegoating. The market is controlled, volatility is created wherever an opportunity arises. This is nothing new. Try not to invest too much time in the immediate and stress yourselves out and blame others sharing views.
The gasoline build was correct but skewed due to forecourts not ordering refills. This happens when the price is dropping. Forecourts run down their storage tanks and delay reordering to get a lower price. Actual sales at pumps are stable. Data will reflect this in the next two weeks. The financial oil ( paper ) market is 30 times larger than the physical market and manipulation is nothing new. You are seeing manipulation in action. A reversal in decline will happen soon.
Anyway, I don't want to write a mammoth essay as to the many reasons why you should remain positive and ruin the negative vibe.
Have a great day
Mark
Last of my three 'feel better' posts.
Oil cartel leader says demand expected to grow - BBC News
https://www.bbc.co.uk/news/business-66985654
Opec JMMC meeting today.
US crude oil stockpiles possibly fell as much as 4.0 million barrels last week while inventories of gasoline likely rose by an almost similar level of 3.9 million, as refiners appeared to maximize fuel production due to lucrative returns, petroleum trade group API reported Tuesday.
Builds were also seen in distillates — a feedstock for diesel and heating fuel — which were delivering some of the highest refining profit margins, known as “cracks”, now due to supply shortages, the weekly inventory report from the American Petroleum Institute showed.
Typically at this time of year, demand for fuels is softer in the United States as fewer families do trip roads with children back in school or college. Yet, refiners seem to be optimizing gasoline and diesel production, incentivized by cracks.
“To give an idea of what cracks are worth now, the one for New York ULSD, which is representative of diesel, is at around $45 a barrel prompt,” said John Kilduff, partner at New York energy hedge fund Again Capital. “Just over a decade ago, we used to have diesel cracks in the single digits and sometimes even the negative.”
The U.S. crude inventory balance fell by 4.21M barrels during the week ended Sept. 29, according to the API, after a build of 1.586M in the prior week to Sept. 22.
Cushing sees 0.7M barrel build, API says/h2
Aside from that balance, the API also noted a 0.705M barrel rise at the Cushing, Oklahoma delivery point for U.S. crude, versus the previous week’s draw of 0.828M. Last week’s build would be the first in months for Cushing, where the trade had feared inventories would fall to such critically low levels that would complicate withdrawals from the storage hub.
On the fuel side, the petroleum trade group reported a gasoline inventory build of 3.946M barrels and distillate stocks rise of 0.349M barrels.
The API data serves as a precursor to official inventory data on the same due from the US Energy (NASDAQ:USEG) Information Administration, or EIA, on Wednesday.
For last week, analysts tracked by Investing.com expect the EIA to report a crude stockpile build of 0.05 million barrels, versus the 2.170M barrel drop reported during the prior week to Sept. 22.
On the gasoline inventory front, the consensus is for a draw of 0.3M (NYSE:MMM) barrels over the 1.027M-barrel build in the previous week. Automotive fuel gasoline is the No. 1 U.S. fuel product.
With distillate stockpiles, the expectation is for a decline of 0.068M, versus the prior week’s gain of 0.398M. Distillates are refined into heating oil, diesel for trucks, buses, trains and ships and fuel for jets.
EIA crude inventories data estimate.
For the week ending Sept 29, an estimate of EIA data showing a crude draw of 3.24 million bbls. This includes the SPR build of 300k bbls. Last week's EIA report showed a crude draw from SPR, so this will reverse that.
A 3.24 million bbl draw would be bullish to the 5-year average build of 0.528 million bbls.