BP PLC (NYSE: BP) has reported a loss of $20.4 billion in the first quarter of 2022. The loss was the result of the company’s decision to exit Russia.
BP said it had to absorb a pretax accounting charge of $25.5 billion, which resulted in the loss despite a rise in commodity prices. The $20.4 billion loss includes a write-down of $13.5 billion related to the company’s exit of its 19.75% stake in Rosneft.
Without taking the Russian exit charges into account, BP’s profit in the quarter stood at $6.2 billion. The company had reported a profit of $4.7 billion in the same quarter last year.
The CEO of BP, Bernard Looney, said, “Our decision in February to exit our shareholding in Rosneft resulted in the material non-cash charges and headline loss we reported today. But it has not changed our strategy, our financial frame, or our expectations for shareholder distributions.”
The oil giant ended the first quarter with net debt of $27.5 billion, compared with $33.3 billion at the end of the first quarter of last year.
Outlook
BP expects to repurchase shares worth $2.5 billion. This is in addition to the buybacks of $1.6 billion made during the first quarter.
Further, the British company has maintained its capital expenditure target of $14 billion to $15 billion for 2022, including the $2.9 billion made in the first quarter.
About BP
London-based BP is an integrated company operating in all areas of the oil and gas industry, including exploration and extraction, refining, distribution and marketing, power generation, and trading.
With a market cap of $101.69 billion, it is one of the largest oil and gas companies in the world.
Wall Street’s Take
Following the announcement of the results, Morgan Stanley (NYSE: MS) analyst Martijn Rats reiterated a Buy rating on the stock but did not provide a price target.
The analyst said, “To our knowledge, this is the first time that BP has labeled its trading results as ‘exceptional’ in both oil and gas in the same quarter. In addition, earnings also benefitted from strong oil & gas price realizations and high refining margins.”
Overall, the stock has a Moderate Buy consensus rating based on five Buys, two Holds and one Sell. BP’s average price target of $36.50 implies 17.1% upside potential. Shares have gained almost 26% over the past year.
Hedge Fund Trading Activity
TipRanks’ Hedge Fund Trading Activity tool shows that confidence in BP is currently Very Positive, as the cumulative change in holdings across all 11 hedge funds that were active in the last quarter was an increase of 1.4 million shares.
Conclusion
After the results were released on Tuesday, shares of BP rose over 8% to close at $31.18. The upside continued, and the stock was trading 0.8% up, at the time of writing, in the pre-market trading session on Wednesday.
The market seems to have digested the charge that the company incurred due to its exit from Russia. The investors are positive about BP’s future on the back of rising commodity prices.
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