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BP Plc (BP) Q4 Earnings Preview: Low Expectations

 January 31, 2013 02:56 PM

(By Rich Bieglmeier) BP plc (BP) will announce its 4Q and full year 2012 financial results will be published on Tuesday 5, February 2013 at 0700 GMT / 0200 EST. Wall Street anticipates that BP will earn $1.11 for the quarter. iStock expects the Major Integrated Oil & Gas company to report earnings that will exceed Wall Street's consensus number. The iEstimate is $1.24 –  a 13 cents upside surprise.

BP p.l.c. provides fuel for transportation, energy for heat and light, lubricants to engines, and petrochemicals products. Its Exploration and Production segment engages in the oil and natural gas exploration, field development, and production; midstream transportation, and storage and processing; and marketing and trading of natural gas, including liquefied natural gas (LNG), and power and natural gas liquids (NGL).

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In the last four years, BP beat the analyst consensus view eight times by an average of 16.78%. The range has been wide, as low as 0.60% above target to 54.05%. BP's stock price reacted in a bullish manor six of the eight positive surprises, increasing 2.81% on average in the days surrounding the news.

On five occasions, BP eps fell short of the mark by as much as 157% and as little as 0.20%, but it didn't matter much to shareholders. On average, the stock GAINED 0.14% on bearish surprises.

The Wall Street Journal says, "BP's profit for the fourth quarter is expected to be lower year-on-year following the loss of production from the sale of its Russian joint venture TNK-BP Ltd. Weaker exploration and production earnings, partly due to asset sales, are expected to be partly offset by stronger refining and marketing performance. Analysts say they will be looking for any progress resolving civil penalties stemming from the 2010 Deepwater Horizon oil spill, ahead of the Feb. 25 trial date that could be an important catalyst for the stock."

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Analysts have been revising estimates lower for the oil & gas company. At the start of Q4, Wall Street forecasts stood at $1.50, 60-days ago at $1.32, at $1.30 30-days ago, $1.20 seven days ago and $1.11 as we type.

The consensus among 13 of the largest brokers following BP is that Exploration & Production revenue will be down 24% year-over-year, and Refining & Marketing will increase 80% compared to the same time a year ago.

At least part of the Deepwater Horizon question was likely answered today. According to the Associated Press, "A federal judge has approved a settlement that calls for BP PLC (US:bp) plead guilty to manslaughter and pay $4 billion in penalties for its part in a 2010 oil spill that wreaked havoc in the Gulf of Mexico."

Overall, Odds are BP plc's (BP) will top bottom rung expectations, but earnings are unlikely to sway the stock in a major way, one direction or the other. With the Deepwater Horizon debacle mostly in the rearview mirror, investors and BP's share price are likely to be tied to natural gas prices in Europe, global oil prices, and political stability/instability in places like Libya and Algeria. 


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