Oil major BP (BP.) trades 0.8% higher at 542.1p on a very strong set of first quarter results, at least at the headline level.
The recent surge in oil prices led to heightened expectations and the shares had already advanced the best part of 20% since late March. Last week Royal Dutch Shell (RDSB) faced this problem when releasing its own first quarter update and saw its shares trade materially lower.
That BP is in positive territory is testament to how robust the numbers are. Canaccord Genuity analyst Alex Brooks notes they are around 17% ahead of consensus ‘with the beat evenly split between upstream and downstream’.
DOWNSTREAM DAZZLES
Shell’s downstream (essentially refining) arm was a weak point in its own results. Higher oil prices are not necessarily helpful to refiners as they mean a higher cost for the crude used as feedstock for refined products like jet fuel and petrol. Oil and gas production is up 9% quarter-on-quarter
One area in which BP chimed with Shell was on disappointing cash flow. AJ Bell investment director Russ Mould says: ’The main negative in the numbers is cash flow performance which was dampened by continuing payments linked to the 2010 Gulf of Mexico oil spill, leading to higher debt.
‘The market seems satisfied for now by assurances that this will represent the peak for outflows relating to the disaster but if this is not in evidence later in the year BP may be in for harsher treatment.’
