‘BP has clearly underperformed’ – analysts react to oil giant’s latest results

Oil and gas analysts have been sharing their thoughts after BP (LON: BP) published its latest set of financials on Tuesday.

Opinions on the London-listed group’s recent performance differ dramatically, after it became the latest supermajor to report diminished, but still weighty, takings.

For the second quarter of the years BP posted net profits of $2.58 billion, a 69% drop from the same quarter of 2022, which stood at $8.45bn.

The hefty decrease was put down to “significant turnaround activity and weaker margins”, as well as oil and gas prices falling from the highs of last year.

Despite the arguably underwhelming performance, BP’s top brass were bullish about the company’s prospects.

And John Moore, senior investment manager at RBC Brewin Dolphin, believes the group is in a better position than its rivals.

He said: “As expected, BP’s results are similar to Shell’s last week – but there are strategic differences that are worth highlighting. A declining oil price environment and, with that, a significant fall in profits are the headlines, but BP is still in a robust position when you look over a longer period.

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“The energy company has focused more than rivals on diversifying, and that is called out in today’s update with the completion of the acquisition of TravelCenters of America and its entry into the German offshore wind market.

“BP also has strong credentials in carbon capture, which offers potential yet to be realised. The litmus test is share buybacks and BP has announced a further $1.5 billion, on top of a 10% dividend hike, indicating confidence from management despite the headline reduction to profits.”

‘Clearly underperformed’

In the last few days the likes of Shell, TotalEnergies and Equinor have all reported vastly reduced quarterly takings, the result of cooling commodity prices.

Even with the dips across the board, Panmure Gordon’s Ashley Kelty says BP is notable for the scale at which it missed targets.

He said: “While the profits tumbled like the fellow majors, the drop in BP’s profits were down far greater at -69% and missed vs consensus on pretty much every metric.

“While commodity prices have softened, BP has clearly underperformed relative to the fellow majors. Investor’s fury will be mitigated slightly by the higher dividend and buybacks.”

Low carbon bets in the UK

In the UK BP has significantly boosted its low-carbon operations with a 40% stake in the Viking CCS project, acreage in the INTOG leasing round, and advancements in hydrogen.

Bernard Looney, the groups’ chief executive, also used his analyst call to reiterated the importance of Britain to the company’s objectives.

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Olly Anibaba, an analyst at investor research firm Third Bridge, said: “BP’s agreement to take a 40% stake in the Viking carbon capture storage project in the North Sea illustrates the company’s commitment to low carbon projects. The region along with US shale is seen as the best location to boost oil and gas production in the short term. Our specialists believe the upstream US onshore projects require less development time and offer a greater return on investment.”