BP expected to post better Q2 figures

The global issues that BP has to contend with show no sign of abating but figures should improve regardless.

A BP petrol station
Source: Bloomberg

BP is set to release its second-quarter figures on Tuesday 29 July, and the markets are expecting the adjusted earnings per share to increase from $0.177 to $0.19, driven by a 3.6% increase in sales and resulting in $5.714 billion of pretax profits.

Once again, European ministers are meeting in Brussels to discuss the current sanctions against Russia and how they might be escalated. This highlights one of the biggest issues that BP has to contend with. At present oil production from Rosneft accounts for roughly a third of the company’s daily volume, and increased sanctions imposed by the west could see this supply disrupted. Although this tie up accounts for a large percentage of the company’s daily output, it is only a fraction of its profits.

At the moment the biggest driving force in these latest figures is likely to be the work carried out last year in reorganising the company’s structure and spending. These changes have gone a long way in enabling the company to see its operating cash flow jump by as much as 50%.

IG clients continue to support the UK oil company and at present are 91% long. Institutions broadly remain cautiously optimistic, with 19 rating the shares as a hold and 12 as a buy or strong buy.

Macro issues out of the company's control continue to be a worry, but the fundamental business is performing well having recently bounced out of oversold territory and retaken the 100-day moving average. The shares should look for higher levels and at least test the 50-DMA around the 508p level.

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