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BP to Capitalize on Mounting Biofuel Demand With Brazilian JV

BP plc BP recently announced the formation of a joint venture (JV) — BP Bunge Bioenergia — with agriculture firm Bunge Ltd. BG.

The newly-formed bioenergy entity in Brazil, for which the companies signed a deal in July 2019, has employed more than 10,000 people and has interests in 11 biofuels sites across five states of the country. The companies have estimated the joint venture’s total crushing capacity at 32 million metric tonnes of sugarcane annually. As a result, the venture has the potential to produce 1.1 million tons of sugar and more than 1.5 billion liters of ethanol. The entity is also capable of supplying 1,200 gigawatt hours of electricity to the country’s national grid.

Importantly, in the bioethanol market of Brazil, the joint venture is the second-largest operator considering the entity’s effective crushing capacity.

There is mounting demand for biofuels in the transportation business — major contributor of green-house gas emissions — since scientists consider biofuels as inherently carbon-neutral. With Brazil being among the largest and fastest growing hubs in the world for biofuel, the British energy giant will be able to generate substantial cashflow for shareholders through its 50% ownership stake in the joint venture.

Headquartered in London, BP is a leading integrated energy player. In the past four quarters, the company surpassed the Zacks Consensus Estimate at 16.8%, on average.

Currently, the company carries a Zacks Rank #3 (Hold). Meanwhile a couple of better-ranked players in the energy space are Murphy USA Inc MUSA and CNX Resources Corporation CNX. While Murphy USA sports a Zacks Rank #1 (Strong Buy), CNX Resources carries a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

Murphy USA beat the Zacks Consensus Estimate in three of the prior four quarters.

CNX Resources surpassed the Zacks Consensus Estimate in two of the prior four quarters. It has a positive earnings surprise of 34.8%, on average, for the trailing four quarters.

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