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BP’s Year-to-Date Net Income Crashed on Special Charges

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Dec. 4 2020, Updated 10:52 a.m. ET

BP’s June 2015 revenues

After analyzing BP’s (BP) 2Q15 performance by segment, we’ll now discuss its year-to-date (or YTD) revenues and earnings. BP recorded $114.84 billion in sales and other operating revenues for June 2015, down 38% from the $185.67 billion recorded in June 2014. Crude oil prices tumbled. The June 2015 average North Sea Brent crude declined 48% compared to the average June 2014 levels. In June 2015, US upstream E&P (exploration and production) operations also slowed down. These changes led to lower upstream revenues.

Year-over-year, BP’s US revenues declined by 42.2% in June 2015 against a 39% fall in BP’s revenues from all its remaining international operations put together.

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BP’s year-to-date or YTD net income

BP’s year-to-date net income swung to a loss of $3.22 billion compared to $6.89 billion in net income a year ago. Its replacement cost (or RC) profit, a measure of BP’s operating income, decreased mostly in its US operations. There, it switched to an $11.13 billion loss in June 2015 compared to a $2.76 billion profit a year ago. In comparison, BP’s non-US RC profit decline was 48% relative to the previous year.

BP’s June 2015 average hydrocarbon (comprising crude oil, natural gas liquids, and natural gas) price realization declined 47% in the United States over June 2014. In comparison, its average hydrocarbon price realization declined 39% in the rest of the world over June 2014. Also, BP’s upstream production increased outside the United States over the period. This, coupled with comparatively better price realization outside the United States, primarily accounted for the company’s geographical earnings variation.

BP’s June 2015 net income margin also deteriorated to -2.8% from 3.7% in June 2014. In June 2015, it recorded $11.24 billion (pre-tax) in impairment and other charges. In June 2014, BP recorded only $268 million in such charges.

How did BP’s competitors do?

In 2Q15, Total’s (TOT) EBITDA[1. Earnings before interest, tax, depreciation, and amortization] dropped 15% compared to a year earlier. Statoil’s (STO) EBITDA declined 13% during the same period. ExxonMobil (XOM) witnessed a 52% drop in its 2Q15 net income over the corresponding 2014 quarter. ExxonMobil is 22% of the iShares US Energy ETF (IYE) and 15.7% of the Energy Select Sector SPDR ETF (XLE).

Next in this series, we’ll discuss BP’s views on the energy market.

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