BP (NYSE: BP) reported third-quarter earnings that exceeded analyst predictions, even though profits were lower compared to a year ago and the previous quarter due to declining oil prices and low refining margins.
On Tuesday, BP announced an underlying replacement cost (RC) profit of $2.3 billion for the third quarter. This figure represents a 30% decrease from $3.3 billion in the same quarter of 2023 and a drop from $2.8 billion in the second quarter of this year. Despite being the lowest profit for BP since the fourth quarter of 2020, it surpassed the analyst consensus estimate of $2.1 billion, according to LSEG.
The company noted that earnings were impacted by weaker refining margins, disappointing oil trading results, and lower liquid realizations, although these were partially offset by higher gas realizations. BP described its gas marketing and trading performance as “average.”
Earlier this month, BP had already indicated that it expected weaker earnings for the third quarter due to low refining margins and poor oil trading outcomes.
Falling refining margins have already affected the earnings of major oil companies in the second quarter, and further declines in the third quarter are anticipated to continue impacting profits. Shell, which is set to release its third-quarter results on Thursday, has also warned that lower refining margins and losses in its chemicals business would affect its earnings.
BP’s net debt rose to $24.3 billion, up from $22.6 billion at the end of the second quarter. This increase was primarily due to lower operating cash flow, higher capital expenditures, and reduced divestment and other proceeds.
Despite the dip in earnings and rising debt, BP announced a $1.75 billion share buyback as part of its $3.5 billion commitment for the second half of 2024. The company plans to announce another $1.75 billion buyback for the fourth quarter of 2024.
However, BP intends to reassess aspects of its financial guidance, including projections for share buybacks in 2025, in a February update on its medium-term plans. This may involve revising its previous goal to reduce oil and gas production by the end of the decade.
In the results announcement, CEO Murray Auchincloss stated, “In oil and gas, we see the potential to grow through the decade with a focus on value over volume.” He also emphasized BP’s belief in the opportunities presented by the energy transition.
Related Topics:
- Oil Price Index Live Chart Today (October 29)
- WTI Crude Oil Price Today（October 29）
- Brent Crude Oil Price Live Chart (October 29)