E - BP: Mixed Q1 But Risk/Reward Remains Highly Attractive
2024-06-11 06:42:34 ET
Summary
- BP's Q1 was mixed, with production up 2.5% QoQ but profits 7% below estimates. Costs/boe also climbed vs Q4, as opposed to declines at Euro peers Shell and Total.
- Favorable Q2 outlook with Whiting back online and higher gas prices supporting upstream profits. Buybacks held at $1.75B/quarter for ~12.1% in 24E distribution yield.
- Management also announced a >$2B cost savings program through YE26, providing further upside to consensus, with 25E EBITDA estimates still ~20% below BP guidance.
- Trading at a 14% FCF yield and offering >12% in distribution yield, I continue to see a favorable risk/reward and reiterate my Overweight rating.
BP ( BP ) delivered a mixed Q1, with a 2.5% QoQ growth in output offset by higher unit production costs and an unplanned outage at the company's largest refinery complex in Whiting. I raised shares to Overweight in April (see here ) when I noted a superior distribution potential and a depressed valuation could enable significantly higher near-term upside relative to Supermajor peers....
BP: Mixed Q1 But Risk/Reward Remains Highly Attractive