ii view: BP 'right on target'

BP is hitting its targets and keeping shareholders happy with dividends and share buybacks.

Second-quarter results

• Profit down 0.4% to $2.81 billion versus Q2 2018
• Production increased by 0.7%
• Net debt up 20% to £46.5 billion
• Dividend unchanged at 10.25 cents per share

Chief executive Bob Dudley said:

"At the midpoint of our five-year plan, BP is right on target. Reliable performance and disciplined growth across our businesses are delivering strong earnings, cash flow and returns to shareholders. And this is also allowing us to grow businesses that can make a significant contribution in the energy transition, helping deliver the energy the world needs with lower carbon."

ii round-up:

Oil giant BP (LSE:BP) operates in over 75 countries. Generating nearly $300 billion of sales in 2018, it employs over 70,000 people and produces 3.7 million barrels of oil equivalent per day. Around 1.7 million barrels of oil pass through its refineries daily and it operates over 18,500 retail sites globally. 

For a round-up of these second-quarter results, please click here.

ii view:

Nine years after the Gulf of Mexico oil disaster, BP continues to navigate a multitude of difficulties and opportunities. Payments for the 2010 spillage are still being made, while the previous acquisition of assets from miner BHP Group (LSE:BHP) has increased group debt. 

Factors outside of management's control such as the oil price and geopolitical tensions can also influence performance. Management's financial assumptions based on an oil price of $55 per barrel currently work in its favour. 

For investors, shareholder returns remain high on the agenda. Cashflow, bolstered by an ongoing business divestment programme, underpin both the dividend and share buybacks. BP bought back 11 million shares in the second quarter alone. An unchanged dividend leaves the historic and forward dividend yield at over 5.5%. In all, we believe BP continues to justify its place within a balanced and diversified portfolio. 

Positives: 

• Generating attractive shareholder returns
• Plans to reduce debt
• Expects to sell over $10 billion of assets by end of 2020
• Growing its low carbon businesses

Negatives:

• Debt swollen by acquisition of BHP Group (LSE:BHP) assets
• Gulf of Mexico oil spill still costing money
• Subject to factors outside its control 
• Anti-fossil fuel sentiment among public and investors

The average rating of stock market analysts:

Buy