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

By: Alice Young
Alice Young
Alice joined the Invezz team after motherhood convinced her to make a career change from actuary-ing. She brings a forensic eye… read more.
on Feb 3, 2014
Updated: Apr 9, 2020

iNVEZZ.com, Monday, February 3: 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.

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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 share price: Q4 earnings drop as momentum slows in 2013) 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. (Oil & gas round-up: BP kicks off Q3 earnings season on upbeat note) 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. (BP share price: Group loses bid to curb Gulf compensation payments)
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.**

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