While a number of analysts are pointing out the solid third quarter a number of oil and gas companies are expected to enjoy, with BP (NYSE:BP) missing out on it, Citigroup (NYSE:C) analysts say it's largely irrelevant as to the earnings put up by BP in the third quarter.
Citigroup said, "The path to rehabilitation post Macondo and Bob Dudley's new strategic direction are the key to performance rather than Q3 earnings."
Analysts from UBS (NYSE:UBS) thought in a similar way as Citigroup concerning BP, but added they do need to remain competitive in the midst of their ongoing transformation.
"The focus will be on the ongoing implications of the Macondo disaster but it will be very important to see that underlying operating and financial performance remains competitive," said UBS in a note to clients.
One strong area in the short term BP should benefit from is in reference to their refining margins.
The refining facilities of BP are located primarily in the United States, where margins this year soared by close to 30 percent, while margins for their competitors like Exxon (NYSE:XOM) and Royal Dutch Shell (NYSE:RDS-A), which have larger refinery exposure in Europe, were flat at best for margins.
Showing posts with label Margins. Show all posts
Showing posts with label Margins. Show all posts
Friday, October 22, 2010
Tuesday, September 28, 2010
BP (NYSE:BP) Refining Margins Lower in Fourth Quarter Says Company Economist
According to BP PLC's (BP) Chief Economist Christof Ruehl, refining margins for the company in the fourth quarter will drop because of the large amount of global oil inventory.
Ruehl said, "We have bloated OECD product stocks - the highest for at least 12 years - caused by an increase in crude runs over the last few quarters. Just when you thought there was a decent few weeks in terms of margins, the existing product overhang points to short-term pressure on margins."
Ruehl added that usually margins in refining are historically lower in the fourth quarter, with eight out of the last ten years experiencing that.
This is year is no different, as refiners raised production because of higher margins earlier in the year, but the demand hasn't met the supply, putting downward pressure on margins.
Problems in Europe's strategy of so-called clean and renewable fuels is a problem as well, with it causing refineries there to be much more costly and less competitive.
Ruehl said, "We have bloated OECD product stocks - the highest for at least 12 years - caused by an increase in crude runs over the last few quarters. Just when you thought there was a decent few weeks in terms of margins, the existing product overhang points to short-term pressure on margins."
Ruehl added that usually margins in refining are historically lower in the fourth quarter, with eight out of the last ten years experiencing that.
This is year is no different, as refiners raised production because of higher margins earlier in the year, but the demand hasn't met the supply, putting downward pressure on margins.
Problems in Europe's strategy of so-called clean and renewable fuels is a problem as well, with it causing refineries there to be much more costly and less competitive.
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