BP share price: Oil giant’s earnings in focus after rivals’ gloomy results

Oil major BP Plc (LON:BP) will come into the earnings spotlight tomorrow when the company unveils its fourth-quarter and full-year results.

Investors are bracing themselves for a drop in BP’s earnings following a disappointing set of results at European rival Royal Dutch Shell Plc (LON:RDSA) and lacklustre updates from US majors ExxonMobil Corp (NYSE:XOM) and Chevron Corp (NYSE:CVX).

BP’s share price which has been little changed over the past year has shed about 0.3 percent in London trading today.

BP earnings in focus

The Telegraph yesterday reported that analysts expect BP to unveil underlying fourth-quarter replacement cost profits of about $2.7 billion (£1.65 billion), against $3.9 billion (£2.39 billion) for the corresponding period in 2012. BP’s full-year earnings are forecast to come in at $13.3 billion, down from $17.1 billion a year ago.

BP’s results follow that of European peer Shell, which last week posted a drop in its fourth-quarter and full-year earnings matching a shock profit warning issued earlier in January.

Shell’s Q4 earnings on a current cost of supplies basis (CCS) dropped to $2.2 billion compared with $7.4 billion in the prior-year quarter while full-year CCS earnings came in at $16.7 billion compared with $27.2 billion in 2012.

Results are not much better on the other side of the Atlantic where US energy giant ExxonMobil last week posted a 16 percent drop in fourth-quarter earnings to $8.4 billion. Full-year earnings declined 27 percent to $32.6 billion.

At California-based Chevron, fourth-quarter earnings fell to $4.9 billion from $7.2 billion in the prior-year quarter, while full-year earnings came in at $21.4 billion, down 18 percent from $26.2 billion in 2012.

“The majors remain growth-challenged given they are so big already,” the New York Times quoted Brian M. Youngberg, a senior energy analyst at Edward Jones, as saying.

BP however surprised markets in October when its third-quarter earnings fell less than analysts had anticipated with the news sending BP’s share price soaring in London trading.

The company further pleased investors by announcing a $10 billion assets sale, with plans to hand most of the proceeds to shareholders, mainly in the form of share buybacks.

Oil spill bill

Investors will also be looking for updates on the costs relating to the Gulf of Mexico oil spill especially following a recent decision of the Fifth Circuit in New Orleans to reject a company bid to curb some of the compensation payments to businesses.

In October, BP revealed that the total cumulative net charge for the 2010 accident had climbed to $42.5 billion in the third quarter from $42.4 billion in the second quarter.

As of 15:13 UTC, buy BP shares at 475.15p.

As of 15:13 UTC, sell BP shares at 475.00p.