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How Did BP’s 2Q16 Earnings Stand up to Analyst Estimates?

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Dec. 4 2020, Updated 3:52 p.m. ET

BP’s 2Q16 performance

BP (BP) reported its 2Q16 earnings on July 26, 2016. Its revenues missed Wall Street analyst estimates by 4%, and it reported a loss of $0.46 in EPS (earnings per share). However, upon adjusting on a URC (underlying replacement cost) basis, BP’s adjusted EPS stood at $0.23, as compared to estimated EPS of $0.29, which still missed analyst estimates.

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BP’s 2Q16 earnings

BP reported a loss of ~$1.4 billion in 2Q16. This translated to URC profits of $720 million in 2Q16, as compared to ~$1.3 billion in 2Q15. URC, a non-GAAP (generally accepted accounting principles) measure, is determined by making certain adjustments to a company’s reported profit or loss for a period. These adjustments include inventory holding gains or losses, the net favorable or unfavorable impacts of non-operating items, and fair value accounting effects net of tax.

BP’s URC EBIT (earnings before interest and tax) also fell. This was due to a decline in the earnings of all its segments YoY (year-over-year). While BP’s Upstream segment’s earnings fell, it turned positive in 2Q16, recovering from the loss in 1Q16. (We’ll take a look at BP’s segment-by-segment performance in the next part of this series.)

Peers

Statoil (STO), Suncor Energy (SU), and PetroChina (PTR) are expected to witness declines in earnings in 2Q16 compared to 2Q15, according to Wall Street analyst estimates. The iShares Core High Dividend ETF (HDV) has ~20% exposure to energy sector stocks.

Next, let’s see how changing oil prices have altered BP’s segmental dynamics.

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