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BP Is ‘On The Cusp’ of Delivering Huge Oil and Gas Results

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Goldman Sachs reminded us just how bullish it is on BP PLC  (BP) .

With a “buy” rating on the oil giant, analyst Michele Della Vigna wrote in a note to clients that “BP is on the cusp of delivering one of the industry’s strongest pipelines of new oil & gas projects.” That, coupled with several other factors, indicated to Della Vigna that BP could be headed for a “free-cash-flow sweet spot.”

With a 12-month price target of $59 a share, roughly 35% above its current level, Della Vigna cited a double-lift to BP’s cash flow. The double-lift is simple: More money coming in, less out.

Record Oil and Gas Pipeline Projects

“The delivery of a record pipeline of upstream projects is progressively bringing BP closer to the sweetspot of its E&P transformation, which we believe will materialize in 2019, with production from nine major upstream projects rapidly ramping up to peak capacity, and capital expenditure commitments falling,” the analyst wrote. And those projects are simply better than the competition, he added. “We estimate that BP’s portfolio of new projects is more profitable today and is now among the best in the industry.”

Macondo Oil Spill Payments Are Coming Down

“Macondo payments are winding down to <5% of BP operating cash flow by 2020,” Della Vigna said. “We expect BP to reach its sweetspot by 2020, particularly once Macondo-related cash payments fall to $1 billion.”

That cash-flow sweetspot isn’t a mere improvement. The increase will be pretty significant. “We expect BP’s FCF yield to grow to >10% by 2021E, as the company not only delivers a record pipeline of upstream projects but does so in a more favourable environment, with higher oil & gas prices,” Della Vigna said.

BP shares fell 0.9% to $43.63 on Thursday.

the street

6 Comments on "BP Is ‘On The Cusp’ of Delivering Huge Oil and Gas Results"

  1. Cloggie on Fri, 10th Aug 2018 10:02 am 

    You do not have to like BP and certainly not Goldman-Sachs, to acknowledge that these people are serious about money.

    Falling of energy cliffs is simply not going to happen any time soon
    Despite the ramblings of millimind the forum loon

  2. twocats on Fri, 10th Aug 2018 2:04 pm 

    “pipelines of new oil and gas projects” ???

    like what? not one field mentioned. and their own Energy Outlook for 2018 basically says its all about NGLs to cover the increased demand with minimal increases from oil and condensates (which is mostly shale oil anyway).

    so 1) conventional is peaked or peaking, 2) shale is struggling, 3) natural gas will act not only as bridge fuel but basically fuel growth until 2040.

    kiss it goodbye.

  3. twocats on Fri, 10th Aug 2018 2:07 pm 

    “these people are serious about money”

    wrong again cloggie. god, i really thought europeans were smarter. these people are con-artists. the only thing they are serious about is going to any length to siphon money from wherever they can. as easy as ABC.

  4. MASTERMIND on Fri, 10th Aug 2018 2:07 pm 


    Here are 65 reasons you are wrong..

    Womp womp!

  5. MASTERMIND on Fri, 10th Aug 2018 2:12 pm 

    1973 computer predicts the end of civilization

  6. Sissyfuss on Sat, 11th Aug 2018 7:36 pm 

    Goldman-Sucks is a fiscal squid with its tentacles attached to every vital organ of Ind Civ sucking up money and resources and power. Not gonna change willfully, have to reprogram their brains through famine and wet bulb temperatures. No wait, they got luxurious bunkers, I got a double wide .

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