BP sees improvement on 2021 margins but still below pre-Covid; ExxonMobil chemical division shows strong performance; Stepan’s CFO says Jan.-March period was best ever; Total’s first quarter net income already above pre-pandemic levels

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BP sees improvement on 2021 margins but still below pre-Covid

BP, which saw its January-March net income more than triple that from a year earlier to $4.7 billion, projects for the rest of the 2021 continued improvement in margins from the 2020 lockdown-related lows but they will still remain below pre-pandemic levels.

Murray Auchincloss, CFO at BP, said during the company’s most recent earnings discussion that oil prices may firm in months ahead “as demand improves driven by strong growth in the U.S. and China, the ongoing vaccine rollout programs, and supported by continued supply intervention by OPEC plus.”

The Henry Hub gas price averaged $3.50 during the first quarter, up from $2.50 in the fourth quarter, but that price increase was the impact of the mid-February winter storm.

As demand improved, “refinery utilization rates are expected to increase although, with net capacity additions of almost one million barrels per day in 2021, we expect industry refining margins to improve compared to 2020 but to remain below pre-COVID levels,” Auchincloss said.

Looking to the second quarter of 2021, “realized refining margins are expected to show a smaller improvement due to the slower recovery in diesel and jet demand,” he added, according to a transcript of the first quarter earnings discussion conference call by Motley Fool.

During the last four quarters, BP’s net debt fell from over $51 billion to about $33 billion as of the end of the first quarter. Last year BP sold petrochemical assets to INEOS, both companies announced at the end of June 2020.

ExxonMobil chemical division shows strong performance

ExxonMobil’s chemical division posted a strong first quarter with over $1.4 billion in earnings, equivalent to a $700-million, quarter-on-quarter improvement, said on April 30 Stephen Littleton, the company’s investor relations vice president.

“Margins improved by $500 million, driven by tightly supplied, polyethylene and polypropylene markets, impacted by the winter storm, where at its peak, approximately 75% of the U.S. polyethylene capacity was offline,” Littleton said.

As for demand for packaging and durable goods, it was “resilient” through the period, he said.

Tight industry supply, shipping constraints, and strong demand contributed to global average margins improving “to the top of the historic 10-year range,” he added.

“We were able to capture the benefits of these improved margins with strong reliability and the rapid recovery of our operations from the winter storm,” Littleton said, according to a transcript of the first quarter conference call from Motley Fool.

Stepan’s CFO says Jan.-March period was best ever

Intermediate chemical manufacturer Stepan had its historically most profitable period ever during the first quarter and its management anticipates even better results in coming months, said Quinn Stepan, chairman and CEO of Stepan.

“The company just completed its best quarter ever. Looking forward, we believe our surfactant volumes in the consumer product end markets should remain strong as a result of continued heightened demand for disinfection, cleaning, and personal wash products,” he said.

Demand for the Illinois-based company’s products may remain strong and expand during the rest of the year.
He said the company anticipates that demand for surfactants within the agricultural and oilfield markets will improve versus 2020.

Meantime, global demand for rigid polyols “continues to recover from pandemic related delays and cancellation of re-roofing and new construction projects,” he said.

This gradual recovery “combined with our first quarter 2021 acquisition of Invista's aromatic polyester polyol business should position our polymer business to deliver strong growth versus prior year,” he added.

Scott Behrens, the company’s president and chief operating officer, said “polymers had a good quarter as the business is gradually coming back after a challenging year due to COVID restrictions.

“The long-term prospects for our polyol business remain attractive as energy conservation efforts and more stringent building codes should increase demand,” he said.

Stepan announced on Jan. 29 the acquisition of Invista's aromatic polyester polyol business and associated assets. It didn’t disclose a transaction price at the time but said annual sales revenue for the unit was about $100 million.

The Invista asset included two manufacturing sites, one in Wilmington, North Carolina and the other in Vlissingen, in the Netherlands.

Total’s first quarter net income already above pre-pandemic levels

France’s Total said on May 1 that its profitability has already returned to pre-pandemic levels after a surge in the first quarter 2021 compared with the previous quarter, in part helped by a harsh winter event in mid-February.

Total’s first quarter 2021 adjusted net income jumped by about 70% to $3 billion.

“We are back on track, and this $3 billion of adjusted net income is actually above the level of the pre-crisis first quarter 2019, despite a less favorable environment this year, benefiting from the action plan delivered in 2020,” said company CFO Jean Pierre Sbraire.

“We're able to capture the volatility in the market. I have in mind some record sales done by our trading in January in the U.S. in the situation of a very cold winter,” he added.

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