BP's $3.3B Profit Misses Forecast on Weak Gas

Credit; dvoevnore/AdobeStock
Credit; dvoevnore/AdobeStock

BP on Tuesday reported third-quarter earnings of $3.3 billion, missing analysts' forecasts as strong oil trading and refining margins were offset by weak gas results and the write down of a large chunk of a U.S. windfarm project.

The British company maintained its dividend at 7.27 cents per share and extended its $1.5 billion share buyback programme over the next three months, leaving its payout policy unchanged.

BP wrote down $540 million in the quarter on its wind power projects offshore New York after officials rejected a request for better terms to reflect what BP referred to as "inflationary pressures and permitting delays".

Norway's Equinor, BP's partner in the projects, booked a $300 million impairment on Friday.

BP paid Equinor $1.1 billion in 2020 for a 50% stake in the venture to develop the Empire and Beacon offshore wind projects which have a combined capacity of 3.3 gigawatts, capable of powering 2 million homes.

BP's shares fell 4% in early trade. 

"BP reported weak numbers this morning...However, notably, BP has reported exceptional gas trading results on several occasions in the last couple of years, including last quarter," said RBC analyst Biraj Borkhataria. 

"Earnings missed across all divisions. In the downstream, customers & products reported $2.1 bln vs consensus $2.4 bln, despite being supported by very strong oil trading results, suggesting weaker refining margin capture in the third quarter."

BP's $3.3 billion third-quarter underlying replacement cost profit, the company's definition of net income, missed forecasts of $4 billion in a company-provided survey of analysts, mainly due to significantly lower earnings from its gas and low carbon division.

That was up from the $2.6 billion profit the company reported in the prior three months due to higher oil and gas production, strong refining margins, lower refinery maintenance, and "a very strong oil trading result", but natural gas marketing and trading were weak. 

However, the result was less than half the $8.15 billion notched up in the third quarter of 2022 when the profits of energy majors spiked to record levels on soaring oil and gas prices.

"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," interim CEO Murray Auchincloss said in a statement.

The results are the first to be reported since Bernard Looney stepped down as CEO on Sept. 12 for failing to fully disclose details of past personal relationships with colleagues. No permanent successor has been named.

The company expects industry refining margins in the fourth quarter to be "significantly lower" than in the third.

BP expects capital expenditure of $16 billion this year, the lower end of its indicated range of $16-$18 billion.

Rivals Chevron and Exxon Mobil last week posted sharp year-on-year drops in third quarter profit as energy prices cooled. 

Shell reports results on Thursday.

BP's quarterly profit  profit https://tmsnrt.rs/3OouZUS

(Reuters - Reporting by Ron Bousso and Shadia Nasralla; editing by Louise Heavens and Jason Neely)

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