BP shares slide after profits miss forecasts by £600million

Energy giant BP failed to meet profit expectations in the third quarter, despite the recent recovery in oil prices.

Analysts had expected the oil giant to report underlying replacement profits – the preferred metric – of US$4 billion ($3.3 billion) for the three months ended September, but instead the company earned US$3.3 billion ($2.7 billion).

BP shares fell 5 percent in early trading before regaining some ground to fall 3.9 percent at 10:30 a.m.

Weak performance by BP’s gas marketing and trading arm hurt profitability, as did a $540 million pre-tax impairment charge on three wind farms off the northeastern US coast.

Oil prices have soared since late summer due to declining production volumes, growing demand from China and, more recently, the conflict between Israel and Hamas.

Predictions: Analysts expected BP to report underlying replacement profits of £3.3 billion for the three months ending September, but instead it earned £2.7 billion

BP and Norwegian energy giant Equinor are trying to renegotiate the deal on the Empire Wind and Beacon Wind projects due to rising costs, but authorities in New York have so far rejected such a request.

Profits were also 60 percent lower than the $10.8 billion earned in the same period last year, after oil and gas prices soared following the easing of Covid-related restrictions and Russia’s invasion of Ukraine.

Prices fell significantly between autumn 2023 and this summer, before recovering as OPEC+ states declared they would extend crude oil production cuts until 2024 and the Chinese government eased draconian lockdown restrictions.

BP left its dividend unchanged after increasing it last quarter, with the hugely popular stock, which currently yields returns for individual UK investors, currently yielding 4 per cent. But BP announced another £1.2 million share buyback, continuing a program of buying back its own shares, which it considers undervalued.

Richard Hunter, head of markets at Interactive Investor, said: ‘Shareholder returns are a high priority for the company and it looks set to remain so.

‘From a broader perspective, some questions remain given the recent departure of the CEO. Compared to the multi-billion dollar fines following the Deepwater Horizon oil spill, short-lived negative oil futures prices and dividend cuts during the pandemic, the resignation is a surprise but perhaps not a major chapter in BP’s history.

‘Furthermore, and now that a temporary replacement has been confirmed, BP hopes that markets will view the situation as normal.

‘However, there will inevitably be uncertainty until a permanent replacement is found and the company makes clear whether there will be any changes to the current strategy.’

BP shares are up 5.5 per cent over the past year, but at 506.1 cents today are up 160 per cent from their pandemic low of just under 200 cents.

> BP shares: view the latest prices, charts and company reports

BP shares are up almost 160% from their Covid-era lows, but remain slightly below their pre-pandemic peak

Murray Auchinloss, the group’s interim chief executive, said: ‘This was a solid quarter, supported by strong underlying operating performance, demonstrating our continued focus on results.

Auchinloss took charge last month when Bernard Looney resigned as BP chief executive after admitting he had not been “fully transparent” about his relationships with other staff on the board.

Looney, who worked for BP for more than three decades, became boss in 2020 at a tumultuous time for the company as the Covid-19 pandemic had caused a massive drop in oil and gas sales.

He pledged to improve the London-based group’s environmental performance and set targets to achieve net zero on an absolute basis across all BP operations by mid-century.

Yet these ambitions were scaled back on the same day the company reported annual profits would more than double to £23 billion by 2022, angering climate campaigners.

Currently, BP aims to reduce CO2 emissions from its upstream oil and gas operations by 20 to 30 percent by the end of this decade, compared to a previous target of 35 to 40 percent.

Amid this rollback, the company has also expanded shareholder returns, announcing a further $1.5 billion share buyback on Tuesday, in addition to a dividend of 7.27 cents per share.

Joseph Evans, a researcher at the think tank The Institute for Public Policy Research, accused BP of “prioritizing profit over people and the planet.”

He added: ‘At a time when energy companies urgently need to respond to climate change by shifting their investments away from fossil fuels, BP has doubled down on its oil and gas business to reap huge profits and enrich their shareholders with more than a billion in revenue. repurchase.’