BP PLC (BP) is a British-based international oil and gas company and headquartered in London, the United Kingdom. BP provides energy services and products globally. It is a vertically integrated company, engaged in activities ranging from exploration and production of oil and natural gas to marketing chemicals and generating solar energy. The company’s operations are differentiated in three segments: Upstream, Downstream Rosneft, and other business verticals. The company has a primary listing on the London Stock Exchange (LSE) with secondary listings on the New York Stock Exchange and the Frankfurt Stock Exchange. BP PLC is a constituent of the London’s Broader benchmark index FTSE 100.
The company’s major brands are The BP brand, Castrol, Aral, Ampm, Amoco and Wild Bean Café.
Upstream: Oil and natural gas exploration, field development, and production using high end upstream digital technology capabilities in seismic imaging and oil recovery opportunities.
Midstream: Transportation, storage, and processing of crude oil and natural gas; focus on ownership and management of oil and gas pipelines, processing facilities, export terminals.
Downstream: Refining, marketing, trading of biogas, LNG, power, natural gas liquids and petrochemical products.
Rosneft: Exploration and production of hydrocarbons; other activities include- jet fuel, bunkering, bitumen and lubricants; owns and operates 13 refineries in Russia with around 2,960 retail service stations.
Other business segments: Production of ethanol, biofuel, solar energy and biopower.
On 20th June 2019, BP Plc announced the allotments for Q1 FY2019 Scrip dividend. The company said that on June 21, 2019, the company will allow and issue 46,389,665 ordinary shares of US$0.25 each share to shareholders who are elected to receive ordinary shares under the Scrip Dividend Programme as an alternative for the Q1 interim dividend for the financial year 2019, payable on June 21, 2019.
Following the issue of the above shares, the number of ordinary shares in issue will be 21,646,379,650 of which 1,258,155,893 are held as treasury shares and leaving a balance of 20,388,223,757 ordinary shares with voting rights.
Application has been made to the Financial Conduct Authority for the shares to be admitted to the Official List and to the London Stock Exchange for the shares to be admitted to trading. Dealings in the shares are expected to commence on 21 June 2019.
First Quarter Update
The higher production and a strong trading performance helped the company to offset the low revenue, which was due to low oil and gas prices in the market and weak refining margins. There was a sectoral downturn in 2014 for the oil and gas industry. BP was able to maintain track recovery for more than the last 18 months.
In 1Q 2019, driven by an increase in the upstream and other business & corporate segment business across the USA & Non-US except a decrease in the downstream revenue, the company’s total revenue and other income declined by 2.5% to $67,407 million as compared to the last year data. The underlying replacement cost (RC) profit stood at $2,358 million, against $2,586 million in 1Q 2018. The group’s profit for the 1Q FY19 was $2,999 million, against $2,531 million in 1Q FY18. The company declared the quarterly dividend of 10.25 cents to be paid on 21-June-19. The net debt at the end of the 1Q FY19 period stood at $45.1 billion, against $39.3 billion in 1Q FY18.
In the official statement issued by the company, Bob Dudley, the Chief Executive Officer said, the company was able to generate a strong profit and a good cash flow in the unstable period which was created because of poor market conditions and the large number of turn arounds.
Financial Highlights (FY 2018, US$ million)
(Source: Annual Report, Company Website)
The company reported sales growth of 24.37 per cent to USD 298,756 million when compared with the last year 2017 data, mainly because of the increase in the upstream and downstream segment business across the USA & Non-US. Reported replacement cost profit was $12.7 billion in FY 2018 which was more than doubled when compared with last year. In 2018, the return on average capital employed was 11.2% (2017: 5.8 per cent). Operating cash flow for FY18 stood at $26.1 billion, a surge of $2 billion from the previous year. In 2018, divestments and other proceeds were USD 3.5 billion. In the next two years, the company is planning to execute more than $10 billion divestments. In the fourth quarter of the financial year 2018, the dividend as announced was 10.25 cents a share. In 2018, the total dividend distributed to the shareholders stood at US$8.1 billion against the US$7.9 billion in FY2017.
Share Price Performance
Daily price chart (as on June 21, 2019), after the market closed. (Source: Thomson Reuters)
On 21st June 2019 (after the market closed), BP PLC shares closed at GBX 556.20, up by 1.256 per cent against the previous day close. During the last one-year, shares have registered a 52w high of GBX 603.60 and a 52w low of GBX 481.35 and at the current market price, the stock was trading 7.9 per cent lower against the 52w high level and 15.6 per cent above the 52w low level. BP PLC’s outstanding market capitalisation stood at around GBP 113.03 billion and ranks it among the large-cap stocks traded on the London Stock Exchange.
On the dividend front, the dividend yield for BP Plc stood at 5.71 per cent. On the valuation front, the stock was trading at a trailing twelve months PE multiple of 11.9x as compared to the industry average PE multiple of 6.7x. Trailing twelve months EV/EBITDA multiple of the company stood at 5.2x as compared to the industry median EV/EBITDA multiple of 1.9x.
Stock’s Beta of 1.43 makes the stock highly volatile against the benchmark index. In the last one year, the stock was down by 0.59 per cent and on three months basis, the stock price declined by 1.35 per cent. On a year-to-date basis, the stock has surged around 12.15 per cent.
On the volume front, the 5-day average daily volume traded on the London Stock Exchange stood at 42,569,172.80, which was 27.86 per cent above the 30-day average daily volume of 33,292,293.00. The 90-day average traded volume stood at 29,549,899.23.
At a simple moving average standpoint, shares were trading higher against the 30day and 200day simple moving averages by 1.95 per cent and 2.77 per cent and marginally higher against the 60day simple moving average by 0.69 per cent respectively.
The 30-days, 14-days, 9-days, and 3-days RSI of the stock stood at 53.22, 57.43, 62.02 and 80.72, respectively.
The company has both upstream and other business & corporate businesses, supported by well-established trading capabilities. The company expects FY19 production to be higher than 2018, thanks to new major projects as well as the contribution from BHP's assets. The wide geographic reach of its operations also helps it to diversify exposure to geopolitical events and give access to growing markets and new resources. The group is well cushioned against the oil prices volatility and commodity pricing cycles as it has both upstream and downstream businesses.
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