By Christian Moess Laursen
BP is scheduled to report its second-quarter results on Tuesday. Here’s what you need to know:
UNDERLYING REPLACEMENT-COST PROFIT: The British oil-and-gas major is expected to book $3.5 billion in underlying replacement-cost profit in the quarter, according to a market consensus provided by the company and averaged from 24 analysts. In the second quarter of 2022, BP made $8.45 billion.
REPLACEMENT-COST PROFIT BEFORE INTEREST AND TAX: Analysts expects BP’s replacement-cost profit before interest and tax to fall to $6.78 billion from $12.46 billion, according to company-provided market consensus.
WHAT TO WATCH:
– OIL AND GAS PRICES: Major energy companies have seen their share prices decline year to date as lower prices for oil and gas have weighed on revenue and profit expectations. Last week, the impact of the weaker prices was laid bare when peers Shell and Equinor posted steep falls in second-quarter profits, and this is likely to be a familiar theme in BP’s results, CMC Markets UK Chief Market Analyst Michael Hewson writes in a market comment. The multinational energy company’s shares have already come under pressure, sliding to a seven-month low in May, after first-quarter profits fell on year, Hewson says in a different note.
– CASH OUTFLOWS & SHAREHOLDER DISTRIBUTION: Unhelpful first-quarter working capital outflows have put BP under pressure to reconsider its shareholder distribution policy, more so than any other major oil company, Bank of America analysts writes in a research note. “This will be particularly important with upcoming 2Q 2023 results, given a series of one-off 2Q cash outflows, inorganic capital expenditure, oil-spill payments [which] will in our view see BP’s net debt increase slightly quarter on quarter, constraining BP’s shareholder distribution,” As a result, the company could lower its quarterly share buyback from $1.75 billion to below $1 billion, the analysts say.
Write to Christian Moess Laursen at christian.moess@wsj.com
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