BP posts weakest quarterly profit in nearly four years as oil prices fall

BP’s profits fell to their lowest level in nearly four years during the third quarter, reflecting weaker oil prices and refining margins.

The energy giant made an underlying replacement cost profit – its preferred profit measure – of $2.3bn (£1.75bn) for the three months to the end of September.

While this figure beat analyst forecasts of $2.1bn (£2.15bn), it was around $500m less than BP earned over the previous three months and $1bn less than the period. equivalent of last year.

It was also the weakest result since the fourth quarter of 2020, when falling oil demand caused by tough Covid-related restrictions limited net profits to $115 million.

BP said operations in recent months have been affected by “lower refining margins and weak contributions to the oil trade.”

Average Brent crude oil prices fell more than 7 percent year-on-year to $80.34 per barrel amid rising production from OPEC+ countries and a slowdown in the Chinese economy.

During the same period, natural gas prices declined more than 15 percent to $2.15 per million British thermal units, thanks in part to increased production and warm weather.

Prices for both oil and gas have fallen since the summer even as conflict in the Middle East raises concerns about disruption to global energy supplies.

Under CEO Murray Auchincloss, BP is scaling back its renewable energy strategy in favor of fossil fuels following significant pressure from investors.

The FTSE 100 company has suspended all new offshore wind projects and signed a memorandum of understanding with the Iraqi government to develop and explore the Kirkuk oil field.

Reuters reported earlier this month that BP was considering abandoning plans to cut oil and gas production by 2030, which were instituted under previous CEO Bernard Looney.

Auchincloss said: ‘In oil and gas, we see the potential to grow over the decade with a focus on value over volume.

“We also believe deeply in the opportunity that the energy transition brings – we have established a number of leadership positions and will continue to qualify our investments to ensure they compete with the rest of our business.”

BP kept its dividend unchanged at 8 cents per share and announced another share buyback program worth $1.75 billion.

However, the company’s operating cash flow plunged by $2 billion to $6.8 billion, while its net debt rose by about the same amount to $24.3 billion.

Danni Hewson, head of financial analysis at AJ Bell, said: “While better than nothing, buybacks alone clearly won’t be enough to beat the market, particularly against a backdrop of lower earnings and cash flow and rising debt.”

“Ultimately, BP has a lot of work to do to convince investors that it has a clear strategy for the future.”

bp stock They fell 2.4 per cent to 389.4p on Tuesday morning, meaning they have lost around a quarter of their value over the past year.