Tip Update BP PLC (uk:BP.)
Our previous tip
- We said Buy
- When 10 Nov 2011
- Price 455p
- Tip performance to date -2%
A dreadful second quarter in which
First-half replacement cost profits (less gains or losses from inventories) fell by 53 per cent on the comparable period in 2011 to $5.17bn. The bulk of this contraction was attributable to a $4.69bn decline between the first and second quarters. BP was also forced to write-down $4.87bn on its assets, including some US refineries, the suspended Liberty oil and gas project in Alaska and a range of shale gas assets. The group also booked $847m in quarterly pre-tax non-operating losses relating to the Gulf of Mexico spill.
Average daily production, excluding TNK-BP, fell by 7 per cent on the first quarter to 2.275m barrels of oil equivalent, while full-year guidance was maintained.
Prior to these figures JPMorgan expected full-year EPS to decline 14 per cent to $1.01 (2011: $1.15).
|ORD PRICE:||444p||MARKET VALUE:||£85bn|
|TOUCH:||444-444.5p||12-MONTH HIGH:||512p||Low: 361p|
|DIVIDEND YIELD:||4.4%||PE RATIO:||8|
|NET ASSET VALUE:||590¢*||NET DEBT:||29%|
SHARE TIP UPDATE:
BP shares are marginally down on our buy tip (455p, 10 Nov 2011), but by the year-end we will have a much clearer idea of the full extent of BP’s Gulf of Mexico liabilities, together with the outcome of the proposed TNK-BP sale – both of which could be strong price catalysts. So trading on an undemanding 7 times earnings, we remain buyers.
Last IC view: Buy, 428p, 25 July 2012