British energy giant, BP plc (BP - Analyst Report) reported second-quarter 2015 adjusted earnings of 43 cents per American Depositary Share (ADS) on a replacement cost basis, excluding non-operating items. The bottom line came below the Zacks Consensus Estimate of 55 cents and saw a drastic decline from the year-ago earnings of $1.18.

BP's total revenue was $61,800 million in the quarter, down from the year-ago level of $95,827 million.

Operational Performance

Upstream

Total production of 2.112 million barrels of oil equivalent per day (MMBoe/d) was up 0.3% year over year.

The company sold liquids for $56.69 per barrel in the second quarter (versus $96.90 in the year-earlier quarter) and natural gas for $3.80 per thousand cubic feet (versus $5.67). Overall price realization fell to $40.04 per Boe from the year-ago level of $64.90 per Boe.

After adjusting for non-operating items and fair value accounting effects, the underlying replacement cost profit before interest and tax for the Upstream segment in the second quarter was $494 million compared with $4,655 million for the comparable quarter in 2014.

The results for the reported quarter reflected significantly lower liquids and gas realizations, and higher exploration write-offs. This was partly offset by lower costs including the benefits from simplification and efficiency activities.

Downstream

Segmental profit rose to $1,867 million from $733 million in the year-ago quarter. The improvement came on the back of a stronger refining environment as well as higher contribution from supply and trading activities.

Refining Marker Margin increased to $19.4 per barrel from $15.4 in the second quarter of 2014. Total refinery throughput increased slightly to 1,656 thousand barrels per day (MB/d) from 1,652 MB/d in the year-earlier period. Refining availability was 94.0% versus 95.3% in the year-ago period.

Rosneft

The Rosneft segment includes equity-accounted earnings from associates, representing BP’s stake in the former. The segment posted profits of $510.0 million in the reported quarter.

Financials

BP's net debt was $24,830 million at the end of the second quarter compared with $24,399 million a year ago. Net debt-to-capitalization ratio was 18.8% versus 15.5% in the second quarter of 2014.

Company Outlook

BP expects third-quarter 2015 production to be broadly flat with the second quarter, after accounting for seasonal maintenance activity.

The company also projects reduced refining margins and lower levels of turnaround activity.

Zacks Rank

BP – one of Europe’s leading oil companies by market value – currently carries a Zacks Rank #3 (Hold). Some better-ranked stocks in the same space are TC PipeLines LP (TCP - Analyst Report), Cheniere Energy Inc. (LNG - Snapshot Report) and EQT Midstream Partners LP (EQM - Snapshot Report). All of these stocks sport a Zacks Rank #1 (Strong Buy) and appear more rewarding for the short term.