Friday, July 31, 2015

BP report Q2 2015


BP, Q2, 2015, front page

BP arrived a couple of days ago with their Q2 report and it was no fun to read it as it almost never has been since I decided to step in as a shareholder. There is no way around it but to say that it was a mistake to step in to BP back then when the entire horrible accident and litigations were still in the cradle. Now we know how large the costs became and BP have divested plenty of assets to be able to pay for this fault which means that BP is definitely no longer the company that it once were. Just as a reminder to myself for the future. If a company looks cheap when litigations are over then that is the moment to consider to buy them and not any moment before then. In this case I bought BP three years and three months to early and looking at BP today... would I then buy it? And if not, then why am I not selling it? Especially now when the oil price is so low and with little chance of short-term improvements... difficult, difficult.


For the report in full please click here and to see the previous summary regarding BP report Q2 2015 or why not take a look at the latest analysis of BP 2015.

Since vacation times are here and I am generally feeling lazy I only took out this income statement from the report as can be seen below. So... for the running half year revenue is down by -40% woow that is just a massive, massive number. To that we add an additional litigation costs of around 11 billion USD and we end up, for the running half year, with -3.1 billion USD. That figure scares me much less than the other two did and happily the revenue and costs follow each other very well and downstream can cover (due to increased margins) for significant price drops for upstream (oil price). 


BP, Q2, 2015, income statement


The Rosneft investment has as of yet been a sorry ordeal since the dividend coming from them has been more than cut in half compared to in 2014 and by the look of it they do not have a similar possibility to leverage up- and down-stream since if they could then the earnings should have remained pretty similar.

Conclusion: Has the turning point finally arrived for BP? In my opinion it has not. If the oil price had been higher then the turn around would probably have started now with the end of the litigations but since it is not then I also assume and are forced to accept that things will take even longer. Should I buy more? Should I sell? I will remain as a shareholder for now and before doing either I will keep filling up my car in Aral and I would need to take a completely fresh look at BP before deciding what to do.

No comments: