The reaction from oil and gas analysts has been fairly muted after BP (LON: BP) published its third quarter financial results earlier today.
BP reported net profits of $3.29 billion (£2.7bn), less than the $4bn expected by analysts and down significantly from $8.15bn (£6.71bn) result in the same quarter of 2022.
However, the result were an improvement on the second quarter result this year of $2.58bn (£2.1bn) in net profit.
BP said the results reflected “lower realizations, a higher depreciation, depletion and amortization charge, and a weak gas marketing and trading result in the third quarter”.
‘Headwinds’ on Q4 horizon
Hargreaves Lansdown head of equity research Derren Nathan said the third quarter result was a “mixed bag” for the oil supermajor.
“But overall the strong cash flows is still enabling it to invest in new projects, make inroads into the debt position and make generous payouts to shareholders,” Mr Nathan said.
© Supplied by Andrew Dykes“Whilst the oil pricing outlook remains strong there are some headwinds blowing into the fourth quarter.
“The high oil price is favourable to the upstream operations but the profits it makes in its petrol station forecourts remain sensitive to the cost of supply. And in refining margins are expected to trend significantly lower.”
Mr Nathan said BP production is expected to remain flat, but with four major projects due to be completed by the end of the year the company is “building a strong foundation for the future”.
While the market was “disappointed” by today’s results, and concerns remain around BP’s renewables ambitions, Mr Nathan said the company is fundamentally well placed to continue building shareholder value.
‘Decent set of results’ for BP interim CEO
Panmure Gordon director and oil and gas research analyst Ashley Kelty said while the “ignominious departure” of former BP chief executive Bernard Looney “remains a cloud”, it was a “decent set of results” for interim CEO Martin Auchincloss.
“Underlying performance was strong, aided by a rally in commodity prices in the period,” Mr Kelty said.
“However, (the) company remains somewhat in limbo until the CEO role is resolved as investors will be following whether the strategy will remain in place or whether a pivot back towards hydrocarbons (like US peers) is on the cards.”
Mr Kelty said media reports of BP looking to add new shale acreage through joint ventures, rather than through mergers and acquisitions, suggests the company’s “low margin renewable business” will be less of a focus going forward.
He also said pressure on margins for BP’s renewables projects remain, pointing to a reported hit of $540 million on an offshore wind project near New York after a request to renegotiate power purchase prices was rejected.
BP dividends during ‘energy crisis’ under fire
Following the results, BP also received criticism from Global Witness, an environmental NGO focused on natural resources, conflict and corruption.
Global Witness said since January 2022, BP had given shareholders a total of £20.1 billion, enough to pay the average heating bills of a third of UK homes.
Global Witness senior campaigner Jonathan Noronha-Gant said: “BP is still riding the wave of the energy crisis, shovelling cash to its shareholders while the UK’s poverty rates spiral.
“The government is allowing BP to make off with the heist of the century – worse still, this government are subsidising big oil firms with billions of taxpayers’ money.
“We need a proper people-first windfall tax now.”
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