Research, Charts & Company Announcements
Research Tree provides access to ongoing research coverage, media content and regulatory news on BP. We currently have 43 research reports from 5 professional analysts.
BP delivered much stronger 3Q17 results than we expected, but largely on the back of an exceptional performance from Fuels. With gearing now on the turn, BP announced plans to offset the scrip through share buy-backs. We have increased our EPS forecasts significantly for 2017, to reflect the strong 3Q17 results and flow into 4Q17, but marginally thereafter, essentially reflecting the end to dilution from scrip. With required equity returns continuing to fall, our perpetualised dividend discount approach to valuation justifies an increase in our Target Price to 560p per share and we maintain our Buy recommendation.
Great Eastern Energy (GEEC LN) (not covered): Half year results to 30 September 2017 | Green Dragon Gas (GDG US) (not covered): Debt maturity extension | BP (BP LN) (not covered): 3Q17 results | Nostrum Oil & Gas (NOG LN)6; BUY, £5.80: 3Q17 trading update | Kosmos Energy (KOS LN) (not covered): Dry well offshore Mauritania
Companies: GEEC GDG BP/ NOG KOS
BP reported solid Q3 17 results, with adjusted net income of $1.87bn, above market expectations of $1.58bn. Key highlights: - Refining earnings up 63% yoy, contribution around 66% of the group’s earnings. - Production increased by 14% yoy to 3.6mbpd thanks to three major projects starting up in the last quarter. - Year-to-date organic balance at $49/bbl. - Share buy-backs announced to offset scrip dilution. - Around $4.5bn in disposal proceeds are expected for full-year 2017, with $1.0bn received in the first nine months. Cash flow from operations came in at $6bn, enough to cover capex and the dividend and give confidence to the group for a share buy-back. Net debt at 30 September 2017 was $39.8bn, compared with $32.4bn a year ago. At end September 2017, gearing was 28.4%, compared with 25.9% a year ago.
BP PLC (BP..L) reported robust Q3 figures today - well ahead of consensus expectations - driven by strong performances in both its Upstream and Downstream activities. Underlying Replacement Cost (RC) Profit was US$ 1.9bn, up triple digits Q/Q and Y/Y. Cash generation was also strong with the ‘books balanced’ for FY-18 at US$ 50/barrel. This outlook has allowed BP to announce that it will commence buying back Scrip dividend issued stock at a rate which will off-set the new issuance level. BP’s valuation is not demanding and assuming that crude oil prices remain in the US$50-US$55 range (Brent crude), we ascribe a Buy recommendation to the stock with 560p target price.
We remain constructive on oil prices which have recovered strongly over the summer. However, we reduce our FY17 Brent forecast to US$54/bbl (from US$60/bbl) and our prospective forecasts to US$60/bbl (from US$70/bbl) making mainly concomitant changes to our other forecasts. That results in an average reduction in our target prices of 12%, although we make no changes to our recommendations. We continue to recommend an overweight stance, although there is less upside than there was. We highlight Eland (TP 125p) and Nostrum (TP 540p) as our top picks and between the majors, we continue to prefer Shell (TP 2,500p).
Companies: BOR BP/ ELA FPM NOG PANR PMG RKH RDSA TLW WRL
BP (BP LN) (not covered): Juniper first gas in Trinidad | Exillon Energy (EXI LN) (not covered): July Production in Russia | Rockhopper Exploration (RKH LN) (not covered): Abu Sennan Drilling Update in Egypt | Tethys Oil (TETY SS)6; HOLD, SEK60: 2Q17 Results
Companies: BP/ EXI RKH TETY
Jadestone Energy (JSE CN); Speculative Buy, C$1.10: Production strategy continues to take shape | BP (BP LN) (not covered): 2Q17 results | IGas Energy (IGAS LN) (not covered): Ellesmere Port planning application validated | JKX Oil & Gas (JKX LN) (not covered): 1H17 results | Genel Energy (GENL LN); HOLD, £0.90: 1H17 results
Companies: BP/ IGAS JKX GENL
BP reported underlying replacement cost profit for 2Q17 of US$684m generating EPS of USc3.47, down 10% YoY and down 55% QoQ. The underlying results are net of a pre-announced pre and post-tax exploration write-off of US$753m, mainly associated with Angola and equivalent to USc3.81 per share. The results beat consensus EPS, which had been falling sharply, of USc2.8; our own forecast was USc3.77. While underlying cash flow generation in the quarter was strong at US$6.9bn, Gulf of Mexico related payments were larger than we expected and the company was overall cash negative in the quarter by US$0.7bn after dividend payments with gearing increasing to 28.8%. We are Buyers of BP with a 520p/share Target Price, but prefer Shell (Buy, 2,500p/share TP).
The group reported its Q2 17 results, which were 30% above expectations at $684m, driven by the downstream division. By division: 1) In the upstream division, the group reported $795m vs. a loss last year. Higher oil prices, but also higher production helped. Production for the quarter was 2,431mbpd, up 9.98% yoy, and up 7% from the previous quarter due to the impacts of the Abu Dhabi concession renewal. For the third quarter, production should be flat compared to Q2 17. 2) In the downstream division, the group reported an adjusted net income of $1.4bn with higher fuel marketing and refining results which were, nevertheless, offset by a significantly lower supply and trading contribution. Refining benefited from stronger refining commercial optimisation. For the third quarter, the group expects a similar level in the industry refining margin and the North American heavy crude oil differential to remain under pressure. On a cash flow basis, operating cash flow, excluding the Gulf of Mexico oil spill payment, was $6.9bn, which is enough to cover both the dividend and capex. The dividend is maintained at $0.10 per share for this quarter. In addition, the results were impacted by a $750m charge for unsuccessful exploration campaigns in Angola.
BP will release 2Q17 earnings on 1 August. We forecast clean replacement cost EPS of USc3.77, around 6% below the median consensus, down 2% YoY and down 51% QoQ. However, BP has pre-advised a ~US$750m pre and post-tax exploration write-off associated with the relinquishment its 50% interest in Block 24/11 offshore Angola which will not be treated as a non-operating item and is itself equivalent to around USc3.8 per share. We expect underlying cash flow generation, excluding the impact of Gulf of Mexico related payments of US$5.5bn, but expect the company to be overall cash negative after cash dividend, capex and Gulf of Mexico payments to the tune of around US$0.5bn in the quarter. As a result, we expect gearing to continue to increase, albeit modestly, to 28.2%. We forecast a maintained dividend of USc10 per share. We amend our FY17 EPS forecast to reflect our revised 2Q17 earnings forecast.
Andes Energia (AEN LN) (not covered): Possible transaction with Mercuria | TAG Oil (TAO CN)1 ; HOLD, C$0.75: Fiscal year-end 2017 results and 2018e capital program greater than anticipated | Hurricane Energy (HUR LN) (not covered): Equity and Convertible Bond Offering | La Francaise de l’Energie (LFDE FP)1,7; Speculative Buy, EUR40: Further progress in Northern France | Serica Energy (SQZ LN) (not covered): Production update in the North Sea | PetroNeft Resources (PTR LN) (not covered): 2016 Results in Russia | Rosneft (ROSN LN) (not covered): US$1.1 bn transaction with Beijing Gas San Leon Energy (SLE LN)
Companies: PGR TAO HUR SQZ PTR ROSN BP/ SLE
BP (BP LN) (not covered); Trinidad gas discoveries | San Leon (SLE LN) (not covered): Revised terms on settlement agreement with Avobone | Volga Gas (VGAS LN) (not covered): May production in Russia | Genel Energy (GENL LN); Speculative Buy, £1.10: Taq Taq production
Companies: BP/ SLE VGAS GENL
We forecast BP to grow Upstream production by 5.4% pa to 2021, boosted by the deals done at year end. That helps to nearly quadruple EPS, driving a sharp improvement in multiple ratings and returns. However, we see little scope to neutralise the scrip dilution before 2021. Translation of the targets BP has set under real world conditions is uncertain but there could be upside to our forecasts if they were to be delivered in full. We initiate on BP with a 520p per share Target Price and a Buy recommendation. However, we prefer Shell which has similar upside to our 2,500p per share Target Price, but should have more than double the cash yield from next year and has a more robust business mix to low oil prices.
BP (BP LN) (not covered) & Kosmos Energy (KOS US) (not covered): Gas discovery offshore Senegal
Companies: BP Kosmos Energy
International equities progressed in a confident manner yesterday. Primarily this was reflecting strong US corporate earnings which, according to Factset, are set to see S&P500 constituents report the best Q1 growth since 2011, although similarly impressive results are also being delivered from Europe, with profits from the Stoxx 600 apparently on track for a 20% hike on the comparable period. The news that Greece has apparently reached a bail-out deal with its international creditors, confidence that Macron will be safely installed as France’s new president this Sunday, together with the wide expectation that Theresa May will secure the Tories a much larger majority in just over a month from now, while things have gone surprisingly quiet on the North Korea front, all contributed to positive investor sentiment. All three principal US indices closed marginally firmer, with gains in techs and industrials being offset by weakness amongst auto and energy stocks, which fell 0.5% as a result of the continuing sell-down of crude futures during the session. Asian equities, however, were a little upset by Q2 results from Apple that were released after the US close, showing that iPhone sales had surprisingly contracted during the period, apparently due to buyers deferring purchase decisions following media reports of future products, meaning revenues missed analysts’ best expectations. Markets in Japan, Hong Kong and South Korea were closed for a holiday today, leaving Chinese equities to start regional trading slightly lower Wednesday morning, where its remained to the close, dragging Taiwan’s tech-sensitive Tiaex index down with it, although the ASX was hardest hit of the local bourses as weak minerals prices knocked miners in this commodity-heavy index while its financials also became subject to profit-taking. In Europe, assuming the Greek government commits the terms of its ‘Preliminary Technical Agreement’ to legislation by its target date of 16th May, Euro-area Finance Ministers should meet on 22nd May to approve disbursement measures, thereby providing additional short-term relief for Continental traders. The only UK macro release scheduled for today is April’s Construction PMI figures, while the EU is due to provide its Q1’2017 GDP and March Producer Prices. The US will deliver weekly MBA Mortgage Applications, Its ADP Employment Change, Markit Services PMI and ISM non-manufacturing PMI for April. Most importantly, this afternoon the Fed is due to release a Monetary Policy Statement, which could provide greater insight into the health of the economy and momentum going forward, although the next hike in the Discount rate is broadly expected by investors to instead be delivered following June’s meeting . There are a good number of UK corporates due to release earnings or trading updates this morning including Sainsbury (SBRY.L), Imperial Brands (IMB.L), Sage group (SGE.L), Paddy Power Betfair (PPB.L), Direct Line Insurance (DLG.L), JD Weatherspoon (JDW.L), OneSavings Bank (OSB.L), Quantum Pharma (QP..L) and Centamin (CEY.L). London, however, is expected to pick up on the mood during Far Eastern trading, to open slightly weaker as investors reflect on the disappointment conveyed by the world’s biggest company by market capitalisation and its dependence on the continuing success of its lead product. The FTSE-100 is seen opening around 10 points weaker in early trade.
Companies: AAU PREM AHCG BP/ MTFB
Research Tree provides access to ongoing research coverage, media content and regulatory news on BP. We currently have 43 research reports from 5 professional analysts.
|13Dec17 17:32||RNS||Transaction in Own Shares|
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|11Dec17 10:14||RNS||Q3 2017 payment of dividends in sterling|
|07Dec17 17:18||RNS||Transaction in Own Shares|
Updated Lincoln resources to 604mmboe of 2C (previous assumption 150mmbbl of best estimate prospective resources); Updated Halifax resources to 1,235mmboe of 2C (previous assumption a notional 100mmbbl of best estimate prospective resources); Added in Warwick at 935mmbbl (previously this was included in our 150mmbbl for Lincoln).
Companies: Hurricane Energy
Hurricane has published this week an updated competent person’s report (CPR) on its West of Shetland fields not previously included in the 2017 Lancaster CPR. The report by auditor RPS Energy covering the Halifax, Lincoln, Warwick, Whirlwind and Strathmore fields confirms over two billion barrels of oil equivalent contingent resources (Hurricane 100% interest) across these fields, with a further 935mmboe of unrisked prospective resources recognised for the (as yet undrilled) Warwick prospect.
Companies: Hurricane Energy
In the October edition of the Hardman Monthly newsletter, Chief Executive, Keith Hiscock analyses the much misunderstood – but highly important – issue of stock liquidity. In particular, he focuses on the lower echelons of the Main Market and of AIM.
Companies: OPM ABZA AVO AGY APH ARBB AVCT BUR CMH CLIG COS DNL EVG GTLY MCL MUR NSF OBT ODX OXB NIPT PHP PURP RE/ RGD SCLP SPH SCE TRX VAL
The Forties system could be shutdown for weeks for unscheduled repair work. This impacts a total of 10 mboe/d production from the Balmoral area, Elgin Franklin and other minor E.ON fields which represent about 13% of the company overall FY17 daily average production.
Companies: Premier Oil
The KSR-16 development well on the Sebou permit encountered 14.2 m of net gas pay in the Hoot formation. The Company expects that the well will be connected to the existing infrastructure and placed on production within the next 30 days. The drilling rig will now move to the ELQ-1 prospect on the Gharb Centre permit and drill the first commitment well on this recently acquired licence. The recently completed KSR-15 well has been connected to the existing infrastructure and it is anticipated that test production will commence early next week.
Companies: SDX ENERGY
Highlights this quarter: Economics: Generally, the data points to modest growth continuing, with a more positive trend in PMI surveys suggesting decent m manufacturing momentum over the next six months. Currency weakness continues to be a double-edged sword for U K manufacturers, with exporters gaining competitiveness while input prices have risen. There has recently been a divergence of sterling’s performance against the euro and the USD. Those in commodity or competitive product areas may well have seen margin erosion, while many in intermediary goods have already passed on price increases to their customers. With low unemployment, the prospect of tighter labour markets post-Brexit and public sector pay caps starting to come off also signals the potential for some labour inflation, long absent from the UK industrial scene. Topic of the quarter: We believe that powerful macro and sectoral pressures will drive further significant changes to the manufacturing supply chain over the next few years. We investigate some of these pressures, with the move to outsource suppliers to low- cost centres, like China, now seeing a slight reverse flow with some restoring to shorten complex and often inflexible supply chains. We see systems technology facilitating greater supply-chain control and efficiency. Brexit will present challenges to the UK supply chain with price and time to market barriers likely to rise, presenting challenges to the UK’s highly integrated and time-sensitive supply chain. Slick distribution infrastructure and greater information sharing with suppliers are likely to prove winning strategies in optimising logistics and gaining stock efficiencies. Sector valuation: The industrials sector has continued to exhibit strength, with small-cap industrials outperforming by 2 % on last year and larger cap industrials by 17%. Currency and improving economic data have been a positive for the sector. While some other sectors have seen a pick-up in profit warnings over recent months, industrial technology companies have announced generally positive or in-line trading updates that have helped to drive the small-cap Industrials to an EV EBITDA of 8.4x and a P/E of 16.7x with the traditional small-cap discount narrowing.
Companies: SIXH ACL AXS AMPH ALU AEP AVG CAPD CAR FENR FLO RAD GHH HDD IOF MPE RE/ RNO RBN SOLI SOM SCE TRI VANL VEL ZAM TRT
Parkmead reported a gross profit for the year to June for the first time in three years. That reflected the benefit of a strong performance from its Dutch operations and the elimination of the drag caused by Athena. Cash and net cash held up well at £26.4m as of 30 June. The company reported a loss per share of 5.0p a substantial improvement on the previous year. Reserves and resources were up marginally YoY at 89.7mmboe as of 30 September. Parkmead further increased its ownership position in four key positions including the Greater Perth Area where the company progressed commercialisation. Parkmead continues to evaluate acquisition opportunities including analysing alternative energy based acquisitions. We have reduced our estimate for negative EPS prospectively but also reduced our Target Price to 70p per share (from 80p). That is still double the current share price which is 80% backed by cash on the balance sheet and Parkmead’s stake in Faroe.
Following the recent interim results and outlook comments, we have taken the opportunity to review and update our earnings and valuation models. We see Anglo Pacific’s royalty revenues as having moved into a period of considerable strength, driven principally by the combination of mining operations at the Kestrel coal mine having moved almost completely into the royalty area and a sharp recovery in coal prices. The stock continues to pay a highly attractive dividend that is set to increase in line with the increase in earnings. The cumulative impact of the changes to our model results in a target price of 157p, which incorporates a 10% premium to the underlying NAV. We reiterate our Buy recommendation.
Companies: Anglo Pacific Group
We take another look at lithium, where there is a growing realisation that the forecast massive increase in demand is already upon us. This realisation has been matched by an awareness that there is no shortage of lithium in geological terms. However, there is still a considerable degree of ignorance about which types of lithium mineralisation are commercially valuable using current processes and technologies; this will require the development and proving of new processes. In this note, we look at what attributes are required for a lithium-bearing deposit to be attractive for development into a successful mine in the present technical and economic environment.
Companies: APF ACP ATYM ASO BKY CAML FDI GEMD HZM PAF PDL SAV SHG WTI WLF
Since its inception in 2010, the Panmure Gordon Conviction List has outperformed the market, returning 278% against a Small Companies index that would have returned 232% over the same period. Our Q4 portfolio reflects our view that the UK equity market stands to benefit from a coordinated upturn in global growth. Low nominal fixed income spreads continue to provide a valuation underpin for global equities. There are increasing signs that the world’s central bankers are making a concerted effort to wean markets off near zero interest rates. However with global debt exceeding 200% of GDP and unfavorable demographic trends, we think their chances of rapid progress are slim.
Companies: CPI CTH CINE JE MJW NOG RPC VM/ XAR
BCA Marketplace and stevia sweeteners developer Purecircle are the latest former AIM companies to be moving into the FTSE 250 index. The changes take place on 18 December and will take the number of former AIM companies in the FTSE 250 to 20 – although Booker and Paysafe are being taken over.
Companies: CFHL TRAK BMN BXP TRCS SND
The new management team despite only being appointed earlier this year has rapidly brought about the start of a material turnaround which we expect to unlock significant unrealised potential at Columbus Energy Resources (CERP)# . The new team has announced an achievable growth strategy, strengthened its financial position with institutional support from Schroders and begun to deliver tangible operational improvements.
Companies: Columbus Energy Resources
Vestas and the Swedish battery manufacturer of the future Northvolt announced a technology collaboration on the development of a lithium-ion battery platform for Vestas power plants. This cooperation will definitely add value for the customer and extend the value chain of the company. Large energy storage solutions are required to reduce the output volatility of renewable energy. The storage systems will support the large-scale integration of renewable energy into the energy system and stabilise the production output.
Companies: Vestas Wind Systems
Eland reported a net loss for FY15 of US$6.8m, less than half that of FY14, on higher revenue and lower costs. After deducting non-controlling interests, the company generated earnings per share of US$0.13 (FY14 US$0.07), well ahead of our US$0.08 estimate. Following the successful US$18.5m equity raise, Eland could exit this year with net production of around 10kbd, on completion of the Gbetiokun and Ubima Early Production Systems (EPS). The FY16 revenue outturn remains subject to restart of the Forcados export system, expected in June. We are buyers of Eland with a 95p/share Target Price.
Companies: Eland Oil & Gas
Rigid-plastic-products manufacturer and waste-management services provider One51 is holding a general meeting on 21 April to gain the shareholder approvals required to issue shares for a potential flotation on AIM and the Enterprise Securities Market (ESM). In 2014, Ireland-based One51 paid 78p a share in cash for AIM-quoted Straight, which valued the wheeled-bins manufacturer at £10.7m. One51 subsequently bought a controlling stake in Canadian plasticproducts business IPL. A flotation would trigger a deal to swap One51 shares for the one-third of IPL that it does not currently own. The plastics division is the main focus of expansion. One51 is a substantial business. In 2015, revenues grew from €276.5m to €366m, while underlying profit almost doubled from €16.2m to €31.9m. A full 12-month contribution from IPL would have taken revenues to €473.5m and grown profit even more rapidly. Plastic products generate nearly two-thirds of revenues and a greater proportion of profit. Net debt was €120m at the end of 2015 and there is contingent consideration of more than €33m that could become payable. Numis and Davy have been appointed as advisers for the flotation, which is still dependent on market conditions. Although One51 is unlisted there has been regular trading in its shares since 2007 and by the end of March the shares were changing hands at €1.70 each.
Companies: PIER MAI 7DIG TAP MANX KBT TRCS ADT BLV AST