Buy-recommended BP offers unlevered appreciation potential of 17% to estimated net present value [NPV] of $87 a share, revised up from $80 a share on May 29 when we raised longterm oil price to $66 a barrel from $60. Second quarter results reported on July 24 trace a rising trend in unlevered cash flow (Ebitda) connected primarily to crude oil price.
Concentrated 59% on oil production, NPV for the mega cap stock looks slightly high compared to our estimates for some thirty other producers. Resolution of a dispute over Kovykta, a large undeveloped natural gas field in Russia, improves BP’s prospects for profit as half-owner of large Russian producer, TNK-BP.
New Chief Executive Tony Hayward also strives to restore operating shortfalls in refining that contributed to higher industry margins, but limited incremental profit for BP. Regardless, the trend in long-term oil price appears to be up despite volatility of short-term quotes. Finally, BP stock also has positive momentum as it trades above its 200-day average.
Concentrated 59% on oil production, NPV for the mega cap stock looks slightly high compared to our estimates for some thirty other producers. Resolution of a dispute over Kovykta, a large undeveloped natural gas field in Russia, improves BP’s prospects for profit as half-owner of large Russian producer, TNK-BP.
New Chief Executive Tony Hayward also strives to restore operating shortfalls in refining that contributed to higher industry margins, but limited incremental profit for BP. Regardless, the trend in long-term oil price appears to be up despite volatility of short-term quotes. Finally, BP stock also has positive momentum as it trades above its 200-day average.
Via: SeekingAlpha
by Kurt Wulff (McDep Associates)
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