BP's High Free Cash Flow Yield And Efficient Capital Improvements Drive Confidence: Goldman Sachs

BP p.l.c. BP shares are trading higher today. Goldman Sachs analyst Michele Della Vigna revised estimates after the company reported second-quarter FY24 results yesterday.

The British oil and gas giant reported sales and other operating revenues of $47.299 billion, missing the consensus of $52.925 billion.

Also, Underlying RC profit per American Depositary Share (ADS) came in at $1.00, beating the consensus of $0.92. 

BP has announced a 10% increase in its interim dividend to 8.000 cents per ordinary share and completed $1.75 billion in share buybacks during the quarter.

According to their estimates, the analyst writes that BP offers a free cash flow yield of approximately 15.2% (2024E), the highest among EU majors.

This is due to cost and capital efficiency improvements, with the company’s breakeven oil price dropping over 75% from its peak, as BP enhances existing infrastructure through cash flow-generative brownfield projects, says the analyst.

Following the results, the analyst adjusted the estimates, resulting in EPS changes of about -8% for 2024, -8% for 2025, and -4% for 2026, primarily due to lower refining margins and gas prices.

Goldman Sachs reiterated a Buy rating with a price target of $48.

Price Action: BP shares are up 1.77% at $35.43 at the last check Wednesday.

Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.

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