Page 12 - EurOil Week 06 2021

EurOil PERFORMANCE EurOil

BP profits buoyed by

Rosneft earnings

UK BP posted an underlying replacement cost (RC) anticipated to remain tight. Its retail fuel sales
profit, its proxy for net income, of $115mn for were down 20% year on year in January, com-
BP’s main upstream the fourth quarter, up from $86mn three months pared with an 11% decline in the fourth quarter.
and downstream earlier but down drastically from $2.57bn in Q4 BP managed to reduce its net debt to $39bn
businesses were weak. 2019. at the end of December, down $1.4bn from three
The company stayed in the black largely months earlier and down $6.5bn from a year
thanks to strong performance at Rosneft and ago. But it achieved this by offloading billions
reduced underlying tax charges. It earned of dollars of assets, including the $5bn sale of its
$311mn from its Rosneft stake, marking a rever- petrochemicals business to the UK’s Ineos at the
sal from a $177mn loss in the previous three end of last year.
months. Debt will creep up again during the first half
In contrast, BP’s main upstream business saw of this year, because of severance payments. But
income drop to $697mn from $878mn three CFO Murray Auchincloss stressed that BP was
months earlier, as output slid to 2.155mn barrels still on track to reach its $35bn net debt target
of oil equivalent per day from 2.2mn boepd. This either in the fourth quarter of 2021 or the first
decline more than offset the impact of higher quarter of 2022. This is important, as it will trig-
international oil prices. ger the resumption of share buybacks.
Downstream earnings slumped to $126mn Interactive Investor analyst Richard Hunter
from $636mn as coronavirus (COVID-19) noted that BP’s outlook “was understandably
restrictions sapped fuel demand. Gas marketing cautious and somewhat out of its hands, with
and trading was also significantly weaker. Losses supply controlled by OPEC and demand cur-
from BP’s other businesses and corporate activi- rently depressed by the effects of the pandemic.’
ties narrowed to $89mn from $130mn. “The more recent improvements have been
Full-year losses swung to $5.7bn, compared reflected in a share price which has risen by 38%
with a $10bn profit in 2019. Besides lower prices since November, although this cannot mask the
and depressed fuel demand, the company was fact that the shares remain down by 41% over
stung by significant exploration write-offs. The the past year, as compared to a decline of 11%
company wrote $6.5bn off the value of its assets for the wider FTSE100,” he said in a note. “Even
after slashing its long-term price forecasts. so, BP is working hard to grow while transform-
The company maintained its dividend at ing and to streamline while venturing into new
$0.0525 per share. areas. The company has continued to engender
Looking ahead, BP expects its downstream longer-term optimism from investors, with the
performance will remain weak because of the market consensus of the shares as a ‘buy’ remain-
impact of the pandemic, with refining margins ing intact."™

P12 www. NEWSBASE .com Week 06 11•February•2021