BP Earnings Boosted by Higher Oil Prices, Margins in 2Q -- Commodity Comment
August 03 2021 - 3:24AM
Dow Jones News
By Jaime Llinares Taboada
BP PLC on Tuesday reported better-than-expected earnings for the
second quarter, raised the dividend and declared a $1.4 billion
share buyback. Here's what the British oil-and-gas major had to
say:
On 2Q results:
"Underlying replacement cost profit was $2.8 billion, compared
with $2.6 billion for the previous quarter. This result was driven
by higher oil prices and margins offset by a lower result in gas
marketing and trading."
On market outlook:
"The oil market is expected to continue its rebalancing process.
Global stocks are expected to decline and reach historical levels
(in terms of days of forward cover) in the first half of 2022."
"Oil demand is expected to recover in 2021 on the back of a
bright macroeconomic outlook, increasing vaccination roll-out and
gradual lifting of Covid-19 restrictions around the world. The
expectation is that demand reaches pre-Covid levels sometime in the
second half of 2022."
"OPEC+ decision making on production levels is a key factor in
oil prices and market rebalancing."
"Global gas demand is expected to recover to above 2019 levels
by end 2021, and LNG demand to increase as a result of higher Asian
imports."
"Industry refining margins are expected to be broadly flat
compared to the second quarter, with recovery in demand offset by
growth in net refining capacity. In lubricants, industry base oil
and additive supply shortages are expected to continue in the
second half."
On BP outlook:
"Looking ahead, we expect third-quarter reported upstream
production to be higher than the second quarter reflecting the
completion of seasonal maintenance activity and the ramp-up of
major projects. Within this, we expect production from oil
production & operations to be higher."
"If Covid restrictions continue to ease, we expect higher
product demand across our customer business in the third quarter.
Realized refining margins are expected to improve slightly
supported by stronger demand and wider North American heavy crude
oil differentials. In Castrol, industry base oil and additive
supply shortages are expected to continue."
"We continue to expect divestment and other proceeds for the
year to reach $5 [billion]-6 billion during the latter stages of
2021. As a result of the first half year divestments, our target of
$25 billion of divestment and other proceeds between the second
half of 2020 and 2025 is now underpinned by agreed or completed
transactions of around $14.9 billion with over $10 billion of
proceeds received."
"BP continues to expect capital expenditure, including inorganic
capital expenditure, of around $13 billion in 2021."
"For full year 2021 we expect reported upstream production to be
lower than 2020 due to the impact of the ongoing divestment
programme."
"However, underlying production should be slightly higher than
2020 with the ramp-up of major projects, primarily in gas regions,
partly offset by the impacts of reduced capital investment and
decline in lower-margin gas assets."
Write to Jaime Llinares Taboada at jaime.llinares@wsj.com;
@JaimeLlinaresT
(END) Dow Jones Newswires
August 03, 2021 03:12 ET (07:12 GMT)
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