Morningstar

BP Announces Share Buyback Program

We increased our fair value estimate after news of the program that will cover scrip dilution.

Securities In This Article
BP PLC ADR
(BP)

In a positive development, in its third-quarter earnings release,

BP's operating results were strong in the third quarter of 2017. Underlying profits grew $1 billion to $1.9 billion compared with last year. On the upstream, 11% higher production volumes from major project ramp-ups and increased price realizations more than offset higher depreciation and amortization charges. Refining and marketing results doubled compared with last year, as higher refining margins outweighed smaller crude differentials in the U.S.

We updated our analysis with third-quarter results, slightly lower full-year capital expenditures, and improved up- and downstream earnings. As a result, we increase our fair value estimate to GBX 475/$38 from GBX 465/$36. Our moat rating remains unchanged at no-moat.

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About the Author

Allen Good, CFA

Director
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Allen Good, CFA, is a director, Europe, for Morningstar*. Based in Amsterdam, he covers the oil and gas industries as well as manages a team of multi-industry analysts. He is also chair of the Morningstar Research Services Economic Moat Committee, a group of senior members of the equity research team responsible for reviewing all Economic Moat ratings issued by Morningstar. In this role, he is responsible for ensuring consistent application of Morningstar’s Economic Moat methodology across sectors and regions as well as updating and revising the methodology. His specialty is global integrated oils such as Exxon, Chevron and Shell and US independent refiners such as Valero and Marathon Petroleum. He also contributes to developing hydrocarbon price and petroleum product margin forecasts used in valuation models.

Before joining Morningstar in 2008, He performed merger and acquisition advisory work for a middle-market investment bank. Before that, he spent several years at Black & Decker in various operational roles, primarily focused on manufacturing and distribution.

Good holds a bachelor’s degree in business from the University of Tennessee and a master’s degree in business administration from Kenan-Flagler Business School at the University of North Carolina. He also holds the Chartered Financial Analyst® designation.

* Morningstar Holland BV (“Morningstar”) is a wholly owned subsidiary of Morningstar, Inc

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