A sign for British oil and gasoline company BP (British Petroleum) is photographed in Warsaw, Poland, on July 29, 2024.
Nurphoto | Nurphoto | getty images
British oil major BP reported Tuesday its weakest quarterly results in nearly four years due to lower crude prices and lower refining margins.
The energy company posted underlying replacement cost profit, which is used as a proxy for net income, of $2.3 billion from July to September. That topped analysts’ expectations of $2.1 billion, according to a consensus compiled by LSEG.
BP reported net profit of $2.8 billion in the second quarter of this year and $3.3 billion in the third quarter of 2023.
The company’s third-quarter results were its weakest since the fourth quarter of 2020, when industry profits declined during the coronavirus pandemic.
“We have made significant progress since setting out six priorities earlier this year to make BP simpler, more focused and higher value,” BP CEO Murray Auchincloss said in a statement.
“In the oil and gas sector, we see potential for growth over the next decade, focusing on value over volume. We also believe deeply in the opportunities the energy transition presents. We have established a number of leadership positions and We will continue to maintain high standards – investment grade to ensure we are competitive with the rest of our business.”
Shares in London-listed BP were down about 2.8% on Tuesday afternoon. The stock has fallen more than 16% since the beginning of the year, underperforming its European peers as investors continue to question the company’s investment case.
BP maintained its payout at 8 cents per share after raising it in the second quarter and said it would keep its share buyback program rate unchanged at $1.75 billion for the next three months.
The company said it plans to announce an additional $1.75 billion in share buybacks in the fourth quarter, but warned that it “plans to review elements of our financial guidance, including our expectations,” as part of its mid-term plan update in February. Share repurchase in 2025.”
Analysts at RBC Capital Markets said Tuesday they expect BP to reduce shareholder returns next year given the weak macro environment.
“However, we also expect BP to move away from its ‘surplus payout ratio’ guidance to the rest of the sector towards CFFO payments, which will also allow more room for deleveraging,” he added. CFFO refers to cash flow from operating activities.
‘BP on the back foot’
Net debt increased from $22.6 billion at the end of the second quarter to $24.3 billion between July and September. BP said the increase was primarily due to lower operating cash flow, higher capital expenditures and lower divestitures.
Oil prices fell more than 17% in the third quarter due to concerns about the outlook for global oil demand.
“Last quarter was not smooth sailing for BP due to difficult trading conditions and profits were significantly lower than this time last year,” John Moore, asset manager at RBC Brewin Dolphin, said in the study. . memo.
BP CEO Murray Auchincloss speaks during a panel discussion during the Abu Dhabi International Petroleum Exhibition and Conference at the ADNEC Exhibition Center on October 2, 2023.
Ryan Lim | Afp | getty images
“The oil price situation and the costs associated with simplifying the business have left BP behind,” Moore said.
“While there has been uncertainty about the company’s strategic and financial priorities, today’s share buyback and dividend announcement will be welcomed by the market,” he added.
oil and gas production
BP’s latest results come shortly after the report. The company scrapped a pledge to reduce oil and gas production by 2030, rolling back a core tenet of the company’s ambition to achieve net-zero emissions by mid-century or sooner.
The move, reported by Reuters on October 7, citing three unnamed sources, will be seen as further evidence of CEO Auchincloss’ plans to prioritize short-term profits from the company’s highly profitable fossil fuel business.
BP is also targeting several new investments in the Middle East and the Gulf of Mexico to increase oil and gas production, the news agency reported.
“As Murray said in his fourth quarter results earlier in the year, the direction is the same, but we will deliver our services as a simpler, more focused and higher value company,” a BP spokesperson told CNBC.
british husks And in France total energy It is due to report quarterly results on Thursday along with the US majors. ExxonMobil and chevron I plan to follow along on Friday.
Last week, Norwegian oil and gas producer Equinor reported a 13% decline in adjusted operating profit for the July-September period, which fell short of analysts’ expectations.
