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BP Surpasses Q3 Earnings Estimates on Higher Production

British energy giant BP plc BP reported strong third-quarter 2017 earnings, courtesy of higher realized prices of liquid and natural gas. Contribution from key upstream projects during the quarter also supported the upside. Following the release, the stock gained nearly 3% on the NYSE during pre-market hours.

It is to be noted that another European energy giant Royal Dutch Shell plc RDS.A is expected to report Q3 results on Nov 2.

BP reported third-quarter adjusted earnings of 57 cents per American Depositary Share (ADS) on a replacement cost basis, excluding non-operating items. The bottom line surpassed the Zacks Consensus Estimate of 50 cents and the year-ago earnings of 30 cents.   

Total revenues were $60,808 million in the quarter, up from $48,043 million in the year-ago quarter.

Operational Performance

Upstream

In the third quarter, total production inched up 16.4% year over year to 2.462 million barrels of oil equivalent per day (MMBoe/d). Key project ramp ups primarily drove the upside.

The company sold liquids at $47.45 a barrel in the third quarter as compared with $40.99 in the year-earlier quarter. It sold natural gas at $2.89 per thousand cubic feet, compared with $2.77 a year ago. Overall price realization increased to $33.23 per barrels of oil equivalent (Boe) from the year-ago level of $29.37.

After adjusting for non-operating items and fair value accounting effects, underlying replacement cost profit before interest and tax for the segment was $1,562 million against a loss of $224 million in the year-ago quarter. Increased realized prices from oil and natural gas primarily drove the upside.

Downstream

Segmental profits improved to $2,338 million from $1,431 million in the year-ago quarter, courtesy of higher refinery throughput.

Refining Marker margin of $16.3 per barrel in the third quarter of 2017 was up from $11.6 in the year-ago quarter. Total refinery throughput increased to 1,745 thousand barrels per day (MB/d) from 1,650 MB/d in the year-earlier quarter. Refining availability was 95.3%, compared with 95.4% in the year-ago period.  

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The segment reported profits of $137 million, compared with $120 million in the year-ago quarter. 

Financials

BP's net debt was $39,777 million at the end of the third quarter, compared with $32,364 million in the year-ago quarter. Net debt-to-capitalization ratio was 28.4% as compared with 25.9% a year ago.

Q3 Price Performance

During third-quarter 2017, BP gained 10.9% as compared with the industry’s 9.5% rally.

 

 

Outlook

BP projects sequentially higher production during fourth-quarter 2017 owing to ongoing project ramp ups.

For fourth-quarter 2017, the company expects refining margin to be down sequentially owing to turnaround activities.

Zacks Rank & Key Picks

BP currently has a Zacks Rank #3 (Hold). Meanwhile, a few better-ranked players in the energy sector are Par Pacific Holdings Inc. PARR and Northern Oil and Gas, Inc. NOG. Par Pacific sports a Zacks Rank #1 (Strong Buy), while Northern Oil carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Headquartered in Houston, TX, Par Pacific managed to beat the Zacks Consensus Estimate in three of the last four quarters, the average positive earnings surprise being 195.26%.

Based in Minnetonka, MN, Northern Oil is an upstream energy player. The company’s 2017 revenues are estimated to grow 44.1%.

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Par Pacific Holdings, Inc. (PARR): Free Stock Analysis Report
 
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