BP (BP) Jumps on Positive Earnings, Asset Sales

Jacob Harper  |

The British oil giant BP plc (BP) issued its third quarter earnings report on Oct 28, and it showed the company had exceeded expectations in both revenue and profits. Concomitantly, BP announced an asset sale totaling some $10 billion and in turn compensated their shareholders with a sizable dividend hike.

The earnings beat is welcome news to energy investors, who see BP’s increased profits as a positive bellwether for a beleaguered sector. BP itself has been moribund this year, gaining a scant 3 percent on the year prior to the earnings call, though their fortunes appear to be changing.

Indeed, the profit beat exceeded analyst expectations by 15 percent, and signaled a turnaround for the lumbering oil behemoth. Profits are down 25 percent since the same quarter last year; however, the hemorrhaging appears to have been mitigated by the company’s aggressive sale of assets.

The company has moved some $38 billion in assets in the last three years, and plans to move another $10 billion by 2015.  The asset sales have counterbalanced the plethora of regulatory fines and damage claims that have rocked the company over the last few years, most notably in the form of ongoing litigation concerning the Gulf of Mexico oil spill stemming from the Deepwater Horizon disaster that claimed eleven worker’s lives in 2010. The company has already set aside some $42.5 billion in cash to continue settling claims resulting from the Gulf spill.

To satiate their investors, BP raised dividends by 5.6 percent to 9.5 cents a share.

For the quarter, BP reported revenue of $96.6 billion, up 5 percent from $92 billion in the year prior quarter.  Net profits were $3.5 billion, or $1.01 cents per share, down from $3.21 billion, or $1.58 cents per share, in the third quarter of 2012. 

Wall Street was expecting adjusted earnings of $0.97 cents per share on revenue of $61.3 billion, excluding asset sales.

BP was up 4.76 percent in midday trading to hit $45.80 a share.

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