BP (NYSE: BP), the
new star of Big Oil, has kicked off the group's latest
slate of earnings. The company did a solid job of positively
surprising its shareholders and investors in general.
For the quarter, revenue was $67.9 billion, down 35.8%
year over year. BP posted a net profit of $5.3 billion --
lower than the $8.1 billion in the comparable quarter a year
ago, but substantially exceeding analysts' expectations.
Indeed, if you back out one-time items and the effects of
inventory changes, BP earned $4.67 billion, a healthy
difference from Wall Street's $3.25 billion forecast. At the
same time, it doubled its cost-reduction target to $4 billion
for the year.
BP has set a high bar for a week that will include results
from most of the world's largest integrated oil companies,
including
ExxonMobil (NYSE: XOM),
Shell (NYSE: RDS-A),
Chevron (NYSE: CVX), and
ConocoPhillips (NYSE: COP). But earnings
season thus far hasn't been kind to all energy companies. For
instance,
Schlumberger (NYSE: SLB), the biggest of the
oilfield-services players, reported a
noteworthy disappointment.
On the upstream side, BP's production for the quarter
represented a 7% increase from the same quarter of 2008.
However, when you factor out the effects of the hurricanes
that swept through the Gulf of Mexico during the third
quarter of 2008, this year's increase amounted to only 4%.
Downstream saw an expected slide over 2008's results, largely
affected by a roughly 50% drop in refining margins, but
results showed sequential improvement.
The most recent quarter was also noteworthy for BP's "
giant discovery," the Tiber Prospect. As operator and 62%
owner, BP found the reserves in conjunction with Conoco and
Brazil's
Petrobras (NYSE: PBR) in the deepwater U.S.
Gulf of Mexico. And on the first day following the close of
the quarter, BP and Sonangol, Angola's national oil company,
announced the Tebe oil discovery in deep waters offshore from
that country.
During the past couple of years, since Tony Hayward
assumed the CEO role at BP, the company has continued to
chalk up
one success after another. As such, I strongly believe
that the company
merits continued attention, especially as energy
commodities continue their slow trudge upward.
BP is a five-star company in our
Motley Fool
CAPScommunity. Head for the company's
CAPS
pageand add your opinion to that ranking.
This article was originally published as
A Strong Start to Big Oil's Earnings Seasonon
Fool.com
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