NEW YORK (TheStreet) -- Shares of BP (BP) closed down 1.02% to $39.98 today on data that shows global oil and gas exploration projects worth more than $150 billion are likely to be put on hold next year as plunging oil prices render them uneconomic, potentially curbing supplies by the end of the decade, Reuters reports.
BP last year put on hold a decision on its Mad Dog Phase 2 deep water project in the Gulf of Mexico after its development costs ballooned to $20 billion and the oil major is now expected to further delay an investment on the field's development, Reuters said.
"BP were talking positively about bringing it back, but now it may be put on hold," BMO Capital Markets analyst Iain Reid said.
BP's CFO Brian Gilvary, however, said in an analysts briefing in October that he expected Mad Dog Phase 2 to be sanctioned in the first quarter of 2015, Reuters added.
Next year, companies will make final investment decisions on a total of 800 oil and gas projects worth $500 billion and totaling nearly 60 billion barrels of oil equivalent, according to data from Norwegian consultancy Rystad Energy.
Additionally, crude-oil prices fell hard again Friday, dragging down the sector, with the U.S. benchmark settling at a fresh five-year low.
On the New York Mercantile Exchange, crude futures for delivery in January dropped by 97 cents, or 1.5%, to settle at $65.84 a barrel, marking the lowest settlement for a front-month contract since July 29, 2009.
Separately, TheStreet Ratings team rates BP PLC as a Hold with a ratings score of C+. TheStreet Ratings Team has this to say about their recommendation:
"We rate BP PLC (BP) a HOLD. The primary factors that have impacted our rating are mixed--some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company's strengths can be seen in multiple areas, such as its reasonable valuation levels, good cash flow from operations and largely solid financial position with reasonable debt levels by most measures. However, as a counter to these strengths, we also find weaknesses including deteriorating net income, disappointing return on equity and poor profit margins."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- Net operating cash flow has increased to $9,399.00 million or 48.43% when compared to the same quarter last year. In addition, BP PLC has also vastly surpassed the industry average cash flow growth rate of -1.64%.
- The current debt-to-equity ratio, 0.43, is low and is below the industry average, implying that there has been successful management of debt levels. Although the company had a strong debt-to-equity ratio, its quick ratio of 0.98 is somewhat weak and could be cause for future problems.
- Return on equity has greatly decreased when compared to its ROE from the same quarter one year prior. This is a signal of major weakness within the corporation. In comparison to the other companies in the Oil, Gas & Consumable Fuels industry and the overall market, BP PLC's return on equity is significantly below that of the industry average and is below that of the S&P 500.
- The gross profit margin for BP PLC is currently extremely low, coming in at 11.86%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of 1.37% trails that of the industry average.
- You can view the full analysis from the report here: BP Ratings Report