(Oil Price) – BP (NYSE: BP) booked third-quarter earnings above analyst expectations, although the profit was lower from a year earlier and the second quarter amid weaker oil prices and low refining margins.
BP reported on Tuesday an underlying replacement cost (RC) profit – its key earnings metric closest to net profit – of $2.3 billion for the third quarter, down by 30% compared to the same period of 2023 and down from $2.8 billion for the previous quarter.
While the third-quarter profit was BP’s weakest since the fourth quarter of 2020, it beat the analyst consensus of $2.1 billion compiled by LSEG
Compared with the second quarter of 2024, the earnings reflect “weaker realized refining margins, a weak oil trading result and lower liquids realizations, partly offset by higher gas realizations,” BP said in a statement, adding that the gas marketing and trading result was “average”.
Earlier this month, BP had already flagged weaker earnings for Q3, on the back of weak refining margins and weaker oil trading results.
Falling refining margins have already hit the second-quarter earnings of the supermajors, and further declines in Q3 are expected to continue to weigh on the profits.
Shell, which reports Q3 results on Thursday, has also warned that lower refining margins and a loss in its chemicals business would weigh on its third-quarter earnings.
At BP, net debt rose to $24.3 billion, up from $22.6 billion at the end of the second quarter, primarily driven by lower operating cash flow, higher capital expenditures, and lower divestment and other proceeds, the UK-based supermajor said.
Despite the lower earnings and higher debt, BP announced a $1.75 billion share buyback as part of its $3.5 billion commitment for the second half of 2024. Furthermore, BP is committed to announcing $1.75 billion for the fourth quarter of 2024, it said.
However, the company intends to review elements of its financial guidance, including expectations for 2025 share buybacks, in a February update on its medium-term plans.
These could include BP scrapping a previous target to reduce its oil and gas production by the end of the decade.
In today’s results release, CEO Murray Auchincloss said “In oil and gas, we see the potential to grow through the decade with a focus on value over volume.”
“We also have a deep belief in the opportunity afforded by the energy transition,” Auchincloss added.
By Tsvetana Paraskova for Oilprice.com
