Since BP (BP.) reported its full-year results on 6 February, events in the Middle East have helped drive Brent crude oil prices higher to bubble around the $90 per barrel mark.
While this has already provided a boost to BP’s share price, it is only likely to have affected the last few weeks of the first-quarter trading period which BP will be reporting on when it updates the market on 7 May.
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Investors will want to see evidence of further operational improvements after progress on this front in the last three months of 2023 helped lift cash flow to $9.4 billion. BP, like its UK counterpart Shell (SHEL), is looking to play catch-up with US rivals which have opened up a meaningful valuation gap in recent years.
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Looking ahead at 2024, Berenberg analyst Henry Tarr says: ‘The company expects higher upstream production, along with growth in convenience and Castrol within C&P (customers & products). Refining margins are expected to be lower with realised margins affected by narrow American heavy crude differentials. Lower gas and liquefied natural gas prices will likely also be headwinds for the group in 2024.’
BP has committed to a $3.5 billion buyback for the first half of 2024 and its plan to return at least 80% of surplus cash flow to shareholders (up from 60%) could lead to positive news on dividends.
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