Energy giant BP has reported a near quadrupling of quarterly profits as it continues its quest to find a new chief executive.
Third quarter pre-tax profits at the North Sea operator skyrocketed to £6 billion, from just over £1.6bn a year earlier.
It took the total profits haul for the first nine months of this year to nearly £18.6bn – equating to more than £2.8m an hour.
But BP’s preferred measure of profits indicates sharp decline year-on-year
Underlying replacement cost profits – the company’s preferred benchmark, reflecting the replacement cost of supplies – totalled £2.7bn in the three months to September 30.
This figure was down by around 60% from £6.8bn a year earlier.
BP had been expected to deliver profits of around £3.3bn on this measure.
The company’s shares fell more than 5.5% in London this morning, before nudging up to 502.6p – still more than 4.5% lower – by market close.
BP’s numbers have improved on the second quarter, but they have still missed market expectations.”
Stuart Lamont, RBC Brewin Dolphin
The firm said its Q3 underlying relacement cost profits reflected higher realised refining margins, a lower level of refining turnaround activity, “very strong” oil trading result, and higher oil and gas production, partly offset by a “weak gas marketing and trading result”.
Stuart Lamont, investment manager in the Aberdeen office of financial services firm RBC Brewin Dolphin, said: “BP’s numbers have improved on the second quarter, but they have still missed market expectations.
“After a tumultuous year or so, with a ‘reset’ to its strategy and the departure of the previous CEO, the company is focusing on major upstream oil, gas and LNG (liquefied natural gas) assets, and slowing investment in renewables.”
Today, we share our 3Q results. We're building momentum and delivering growth – investing in oil and gas to keep energy flowing today AND investing in the future energy system.
— bp (@bp_plc) October 31, 2023
Mr Lamont added: “Profits and free cashflow remain relatively strong and will underpin planned returns to shareholders. This may well raise eyebrows in the current environment, particularly with oil prices predicted to continue their recent rise amid geopolitical tension.“
BP investors are getting a third quarter dividend of 7.270 cents per share.
The company plans to execute a further £1.2bn-plus share buyback before its full year results in January.
Revenue down on lower oil prices
Total revenue and other income in the third quarter and first nine months of 2023 came in at £44.3bn and £131.5bn respectively, down from £47.4bn and £146.5bn a year ago.
The price of a barrel of benchmark Brent crude oil averaged $86.75 in Q3, down from $100.84 a year earlier.
Interim chief executive Murray Auchincloss said: “This has been a solid quarter, supported by strong underlying operational performance, demonstrating our continued focus on delivery.
“Momentum continues to build across our businesses.
“We remain committed to executing our strategy, expect to grow earnings through this decade and are on track to deliver strong returns for our shareholders.”
Mr Auchinloss became interim CEO of BP following the resignation of Bernard Looney in September.
Mr Looney – a former boss of the group’s North Sea business – quit, with immediate effect, after failing to be “fully transparent” in his disclosures about past relationships.
BP did not mention its hunt for a new CEO in its Q3 results statement.
Outlining significant developments from the third quarter, it highlighted regulatory approval for the Murlach oil and gas development in the North Sea in September.
Meanwhile, the company and its partners in the Clair field made a final investment decision to proceed with the construction and operation of the “Shetland crossover pipeline”.
Mooted last year, the 0.8 mile connection will link the Sullom Voe oil terminal in Shetland with the Shetland Islands Regional Gas Export System (Sirge) pipeline system. Sirge connects the Shetland gas plant to St Fergus gas terminal, near Peterhead.
BP said it had made continued progress in its “transformation to an integrated energy company”.
The group reported its renewables pipeline had increased by 6.7 gigawatts (GW) during the first nine months of 2023. In total, the renewables pipeline now stands at 43.9GW.
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