Thursday 4 February 2016

BP annual report 2015

The British oil giant BP arrived with their fourth quarter which also means that report for the full year 2015. The share price that was already pushed down took yet another nose dive down by around -8% or something around that figure.

For the report in full please click here and to see the previous summary regarding BP report Q3 2015 or why not take a look at the latest analysis of BP 2015 (a new one will be published tomorrow though).

The annual report was not full of joy. But then again... if you expected joy in the report from an oil company then probably you have not followed what is happening in the world. What could then be the reason for the unhappiness from the market. Well... the dividend was kept as such. They ended up with heavy losses and very low revenue. Additionally the outlook was flat. I am actually happy that the dividend will remain as it is because it might just have well been decreased or cut completely. That they say a flat outlook does not amaze me either and low revenue and losses we already could see in Q3 but yeah, I agree that the losses increased one step further. Funny thing is that if one compare Q3 2014 with Q3 2015 and then Q4 2014 and Q4 2015 then they booked a bigger loss in the fourth quarter last year than what they did in this one.

So let us take a look at the financial statement below... well the first row is awful with a decreased revenue of almost -40%! That is a huge number! On the other hand... Why should you pump up a lot of oil and gas if you can not sell it at a profit? Then it is better to buy it up cheap from competitors and use that in the downstream process. But I guess it takes too long to turn these giants around like that. Going down to the very bottom of the table then we see that we ended up with a loss of -6.5 billion USD. That is indeed a lot. In the year a 12 billion USD cost was taken for the Deep Horizon settlements so excluding that for the coming year and considering everything to be flat then BP could end up with a 6 billion USD profit but probably something more will arrive so one should never think ahead of matters at hand.

Conclusion: BP is still the triple sandwich with Deep Horizon, low oil price and a Russia in bits and pieces. To me that means that BP is the real underdog and I really have no clue how things could go worse for them. It is like one of those stories where you could never imagine that the "hero" could end up in an even worse situation... but you were wrong. I will remain as a shareholder in BP and no I would not be afraid to increase my position but I also do not see that BP will jump out of the box any time soon so I do not see any need for stress.

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