BP's Strategic Initiatives To Counter Macro Risks Impress
Zacks Investment Research | Jul 10, 2016 09:59PM ET
On Jul 8, 2016, we issued an updated research report on energy giant, BP plc (LON:BP) (NYSE:BP) .
The company is offloading its non-core upstream properties and creating a portfolio with potentially stronger growth from a smaller base. BP has already sold refineries in Carson, CA and Texas City, TX, which hold half of its U.S. capacity. It has, however, retained three refineries – Cherry Point, Toledo (co-owned with Husky Energy), and Whiting – with the greatest competitive advantage. These refineries are expected to improve returns for the company.
In terms of assets, BP owns a strong and diversified portfolio of global energy businesses that offer attractive long-term growth opportunities. The group’s strong inventory of development projects should support volume growth in the long run.
BP’s upstream margins are likely to be driven by its four main profit centers – Angola, Azerbaijan, the North Sea and the Gulf of Mexico. Over the medium term, the company expects strong cash flows from project startups that will enhance shareholder distributions.
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