BP plc (BP) Tops Q1 EPS by 1c

BP plc (NYSE: BP) reported Q1 EPS of ($0.16), $0.01 better than the analyst estimate of ($0.17). Revenue for the quarter came in at $38.51 billion versus the consensus estimate of $42.99 billion.

• BP’s first-quarter replacement cost (RC) loss was $485 million, compared with a profit of $2,103 million a year ago. After adjusting for a net charge for non-operating items of $778 million and net unfavourable fair value accounting effects of $239 million (both on a post-tax basis), underlying RC profit for the first quarter was $532 million, compared with $2,577 million for the same period in 2015. Cumulative restructuring charges from the beginning of the fourth quarter 2014 totalled $1.9 billion by the end of the first quarter 2016.
• All amounts, including finance costs, relating to the Gulf of Mexico oil spill have been treated as non-operating items, with a net pre-tax charge of $917 million for the first quarter. The charge before interest and tax relating to the Gulf of Mexico oil spill is now reported in Other businesses and corporate, comparative amounts are also shown on this basis. For further information on the Gulf of Mexico oil spill and its consequences see page 9 and Note 2 on page 15. See also Legal proceedings on page 30.
• On 22 March, a motion to approve the Consent Decree relating to the agreements in principle to settle all outstanding federal and state claims arising from the 2010 Deepwater Horizon oil spill was filed by the US government with the district court. On 4 April, the district court approved the Consent Decree.
• Net cash provided by operating activities for the first quarter was $1.9 billion, the same as the equivalent period in 2015. Excluding amounts related to the Gulf of Mexico oil spill, net cash provided by operating activities for the first quarter was $3.0 billion, compared with $2.5 billion for the same period in 2015.
• Net debt* at 31 March 2016 was $30.0 billion, compared with $25.1 billion a year ago. The net debt ratio* at 31 March 2016 was 23.6%, compared with 21.6% at 31 December 2015 and 18.4% a year ago. Net debt and the net debt ratio are non-GAAP measures. See page 22 for more information. Following approval of the Consent Decree and finalization of the agreements described above, and to allow more flexibility in the current volatile price environment, we will revert to targeting a net debt ratio of 20-30%.
• Total capital expenditure on an accruals basis for the first quarter was $4.0 billion, of which organic capital expenditure* was $3.9 billion, compared with $4.5 billion for the same period in 2015, of which organic capital expenditure was $4.4 billion. See page 24 for further information. We expect organic capital expenditure to be around $17 billion for 2016.
• Disposal proceeds were $1.1 billion for the first quarter, compared with $1.7 billion for the same period in 2015.
• The effective tax rate (ETR) on RC profit or loss for the first quarter was 37%, compared with -42% for the same period in 2015. Adjusting for non-operating items and fair value accounting effects and a one-off adjustment as a result of the reduction in the rate of the UK North Sea supplementary charge in 2015, the underlying ETR for the first quarter was 18%, compared with 21% for the same period in 2015. The underlying ETR for the first quarter was lower than a year ago mainly due to changes in the mix of profits and foreign exchange effects from a weaker US dollar.

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