Buy-recommended BP plc (BP) offers unlevered appreciation potential of 13% to estimated net present value [NPV] of $84 a share, concentrated 67% on oil production. First quarter results reported today exceeded our expectations for total cash flow with more from production and less from downstream than projected in our analysis three months ago.

Projected volumes along with current futures prices promise a continuing high level of unlevered cash flow (Ebitda). NPV is supported by projected cash flow capitalized at unlevered multiples (PV/Ebitda) related to reserve life (Adjusted R/P).

According to latest estimates, proven oil reserves are concentrated a third in Russia where we are optimistic about the company’s prospects despite political concerns. Finally, we are encouraged that BP’s quarterly financial results better reflect oil price as it continues to trend upward.

Originally published on April 29, 2008.