BP's Prospects Brighten with Oil Discoveries

Buy-recommended BP plc (BP) offers unlevered appreciation potential of 33% to a McDep Ratio of 1.0 where stock price would equal Net Present Value (NPV) of $80 a share. We raise NPV from $72 a share on the basis of operating improvements both upstream and downstream. Third quarter results released today confirmed a return to higher margins following deterioration in recent years.

We project production cash flow margin at 45% in the next few quarters, up from 41% previously. NPV is sensitive to expected performance in our valuation that capitalizes cash flow at unlevered multiples (PV/Ebitda) related to reserve life (Adjusted R/P) for natural gas and oil.

The billion barrel Tiber oil discovery in the deep Gulf of Mexico, announced last month, adds further credibility to the turnaround under Chief Executive Tony Hayward. Tiber follows Kaskida in the Deep Tertiary trend southwest of the offshore Louisiana fields. The future profitability of BP’s largest lease position in the Gulf of Mexico looks brighter under a rising trend for oil and gas commodity prices.

Originally published on October 27, 2009.

Comments

[Advill]

More important than Tiber deposit is the deal to increase in more than 100% the production in Iraq, that is immediate, carries much lower investments and production cost is lower similar than Saudi oil.

It could be interesting than you evaluate the impact in the next 3 quarters of this additional 1 million barrels will have.

Rgds.

2009 Nov 24 05:45 PM

[OilFinder]

That additional 1 million bpd from Iraq is not going to materialize for several years:
www.bp.com/genericarti...
^
" BP and CNPC plan to invest approximately $15 billion in cash over the 20 year lifetime of the contract with the intention of increasing plateau production to 2.85 million b/d in the second half of the next decade."

The second half of the next decade would be sometime after 2015.

On Nov 24 05:45 PM Advill wrote:

> More important than Tiber deposit is the deal to increase in more
> than 100% the production in Iraq, that is immediate, carries much
> lower investments and production cost is lower similar than Saudi
> oil.
>
> It could be interesting than you evaluate the impact in the next
> 3 quarters of this additional 1 million barrels will have.
>
> Rgds.

2009 Nov 24 10:32 PM

[Advill]

Well, yes it´s the official site, the reading i had was that BP and ENI got contracts with the compromise to increase in the shortest period possible, thanks for the information.


On Nov 24 10:32 PM OilFinder wrote:

> That additional 1 million bpd from Iraq is not going to materialize
> for several years:
> www.bp.com/genericarti...;contentId=7057650
>
> ^
> " BP and CNPC plan to invest approximately $15 billion in cash over
> the 20 year lifetime of the contract with the intention of increasing
> plateau production to 2.85 million b/d in the second half of the
> next decade."
>
> The second half of the next decade would be sometime after 2015.
>
>
> On Nov 24 05:45 PM Advill wrote:

2009 Nov 25 01:51 AM