Earnings on Tap: BP
BP's second-quarter results will likely be weighed by a combination of planned shutdowns and a challenging environment in its downstream operations.
Market Update
U.K. energy major BP (BP) is set to report second-quarter results before the opening bell Tuesday. Wall Street analysts expect the company to report earnings of $1.09 per share compared with a loss of $0.44 in the year-ago period.
Investors will focus on the update the company provides in relation to the escalating costs from the Gulf of Mexico oil spill. Although BP is still awaiting the outcome of a trial that will determine how liabilities for the disaster will be shared, it faces yet another trial in September to decide the size of the oil spill from the explosion. Furthermore, the company has gone to court to plea against the way claims are being settled by authorities. It has set aside $8 billion for claims but fears settlements could exceed that amount.
Investors will also focus on the first full quarter of results from Rosneft in which BP has a stake close to about 20%. BP recognized only nine days' earnings from Rosneft in the first quarter. Overall quarter-on-quarter production is expected to be lower because of planned turnaround activity.
The stock is up nearly 5% year to date and trades around Morningstar's fair value estimate. Morningstar analyst Stephen Simko wrote in a recent Stock Analyst Report that after a multiyear period of shrinking because of the Deepwater Horizon spill, BP is finally ready to start growing again.