Why BP Shares Are Trading Lower Premarket Today

Zinger Key Points
  • BP reports Q1 FY24 results: Sales miss at $48.88 billion, adjusted EBITDA declines to $10.3 billion.
  • CEO Auchincloss highlights resilience, strategy progress. BP announces dividend, and Q2 outlook.

BP PLC BP shares are trading lower after the company reported first-quarter FY24 results.

Sales and other operating revenues came in at $48.88 billion, missing the consensus of $55.08 billion.

Hydrocarbons production was 914 mboe/d (-5.7% Y/Y), with underlying production down 3.5% Y/Y mainly due to base decline partially offset by major projects, which started in 2023. 

The Renewables pipeline stood at 58.5GW (bp net), including a 20.4GW bp net share of Lightsource BP’s pipeline in the quarter. 

Adjusted EBITDA declined to $10.3 billion from $13.1 billion a year ago. Underlying RC profit per American Depositary Share (ADS) came in at $0.97, missing the consensus of $0.98. 

Operating cash flow was $5.01 billion, compared to $7.62 billion in the prior-year quarter. Capital expenditure was $4.28 billion versus $3.63 billion a year ago. 

Net debt rose to $24.02 billion from $21.23 billion a year ago.

Chief executive officer Murray Auchincloss said, “We’ve delivered another resilient quarter financially and continued to progress on our strategy. Oil production was up and our ACE platform in the Caspian is now producing. We are simplifying and reducing complexity across bp and plan to deliver at least $2 billion of cash cost savings by the end of 2026 through high grading our portfolio, digital transformation, supply chain efficiencies and global capability hubs.” 

Dividend: BP announced a dividend per share of 7.270 cents, payable to common shareholders and ADS holders, on June 28, with a record date of May 17.

Repurchase: The company completed $1.75 billion in share buybacks during the quarter. The company expects to buy back $3.5 billion in shares in the first half of 2024.

Second-Quarter FY24 Outlook: BP expects reported upstream production to be slightly lower Q/Q in the quarter. 

The company expects seasonally higher volumes and fuel margins to remain sensitive to movements in the cost of supply in the quarter. 

FY24 Guidance: BP continues to expect both reported and underlying upstream production to be slightly higher Y/Y in FY24

The company projects capital expenditure (including inorganic capital expenditure) to be around $16 billion, with phasing to be split broadly evenly between the first half and the second half.

BP projects divestment and other proceeds of $2 billion-$3 billion in 2024, weighted towards the second half. 

The company continues to expect to reach $25 billion in divestment and other proceeds between the second half of 2020 and 2025.

Last month, BP disclosed simplifying its organizational structure, supporting the delivery of the priorities it set out in February 2024.

Investors can gain exposure to the stock via Direxion Hydrogen ETF HJEN and First Trust Exchange-Traded Fund IV FT Energy Income Partners Strategy ETF EIPX.

Also ReadBP Trims Workforce In Its EV Charging Business: Report

Price Action: BP shares are trading lower by 2.13% at $38.21 premarket at the last check Tuesday.

Photo: Jon Lyall via Shutterstock

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