BP Share Price Rallied 6.92% on Upbeat Q4 and FY 2023 Results

The BP plc (LON: BP) share price rallied 6.92% after its Q4 and full-year 2023 results were released. The underlying replacement cost profit for the quarter stood at $3.0 billion, a decrease from the $3.3 billion reported in the prior quarter. The change was attributed to a robust gas marketing and trading performance and an uptick in oil prices. 

The oil major’s performance also benefitted from the positive effects of pricing delays in the Gulf of Mexico and UAE, improved gas prices, and a notable decline in refining margins across the industry, although with a lesser drop in realised refining margins, weaker oil trading outcomes, increased exploration write-downs, and a rise in refining maintenance activities. 

The quarter saw an underlying effective tax rate of 42%, bringing the annual rate to 39%.

The reported quarterly profit was $0.4 billion, a fall from $4.9 billion in the third quarter of 2023. This figure was adjusted for inventory holding losses of $1.2 billion (after taxes) and a net negative impact from adjustments amounting to $1.5 billion (after taxes) to calculate the underlying replacement cost profit.

The adjustments before tax included $4.6 billion in impairments, mainly due to revisions in the company's pricing, discount rate assumptions, scheduling of activities, economic projections (especially concerning the Gelsenkirchen refinery), and portfolio changes, as well as favourable fair value accounting effects of $2.6 billion.

The operating cash flow for the quarter was $9.4 billion, which includes a working capital release of $2.1 billion after adjusting for inventory holding losses and other items. Capital expenditures for the quarter totalled $4.7 billion, with annual spending reaching $16.3 billion.

An additional share buyback of $1.75 billion was announced for the fourth quarter of 2023, with plans for $3.5 billion in the first half of 2024. 

Murray Auchincloss, BP’s CEO, said: “Looking back, 2023 was a year of strong operational performance with real momentum in delivery right across the business. And as we look ahead, our destination remains unchanged – from IOC to IEC – focused on growing the value of bp. We are confident in our strategy of delivering as a simpler, more focused and higher-value company and committed to growing long-term value for our shareholders.”

The BP share price. 

The BP share price rallied 6.92% to trade at 485.48p from Monday’s closing price of 454.05p.

Following the BP earnings release, analysts at Scotiabank raised their price target for the oil giant to $45 from $41 per share, keeping an Outperform rating on the stock. The bank said BP's Q4 earnings report will positively impact its stock's near-term performance.

TD Securities also raised its price target for BP, this time from $41 to $43 per share. The firm said the Buy-rated company's earnings report was strong.