BP (BP.) has announced second quarter of the year results emphasising “generating value for our shareholders today while we transition the company for the future”. Sounds good, but what’s the detail?
The company emphasised “underlying replacement cost profit was $2.8 billion, compared with $2.6 billion for the previous quarter. This result was driven by higher oil prices and margins offset by a lower result in gas marketing and trading”. It enabled net debt to be reduced from $33.3 billion at the end of the prior quarter to $32.7 billion and it to announce a 4% increased quarterly dividend per share to $0.0546 and a $1.4 billion share buyback.
It states the dividend increase “is accommodated within a 2021-5 average cash balance point of around $40 per barrel Brent, $11 per barrel RMM (Refining Marker Margin) and $3 per mmBtu Henry Hub (all 2020 real)” and that on average at around $60 per barrel it expects to be able to deliver buybacks of around $1 billion per quarter and to have capacity for an annual increase in the dividend per share of around 4% through 2025. On its ‘transition for the future’ it notes that since outlining its new strategy a year ago, it has delivered 8 major projects, built a 21GW renewable pipeline and grown convenience and electrification – and the shares have currently responded to this latest by rising 6%.
That is with oil currently above $70 per barrel, with the company noting “an improving environment”, and giving a current market cap of approx. £62 billion, currently equating to circa $86 billion. Meanwhile the dividend suggests still a comfortably more than 5% forward yield. We continue to see quite simple scope in the present low-income environment for a 350p+ share price here - still a circa 4.5% dividend yield - and, at up to 310p, the shares are still a Income buy.
This article first appeared on the N50 website which Tom Winnifrith runs with Steve Moore & Lucian Miers. To access the website for a new shorting piece just out TODAY and ahead of the next share tip from Tom & Steve click HERE
Filed under: BP, Tirupati Graphite, Tricorn, Falanx, TomWinnifrith.com, N50 website
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