Oil-and-gas major BP has reported its weakest quarterly profits in almost four years as lower oil prices and falling refining margins continue to weigh on the energy sector.
European Brent crude prices fell by more than 11% to an average $74.02/bbl in September from $83.48/bbl in February, according to U.S. Energy Information Administration figures.
The London-based company made underlying profits of $2.27bn in the July-September 2024 period, beating analyst expectations of $2.05bn. That was down significantly from $2.8bn in the second quarter and from $3.3bn in the same period in 2023.
The 30% year-on-year drop in earnings adds pressure on CEO Murray Auchincloss who took the job in January and has pledged to make BP “simpler, more focused and higher value.”
“Refining margins are dismal right now. The third quarter was a tough quarter, and the start of the fourth quarter is pretty bad as well,” Auchincloss told Reuters.
“Against a backdrop of difficult trading conditions, this last quarter has not been plain sailing for BP and profit is considerably lower than it was this time last year,” John Moore, senior investment manager at wealth manager RBC Brewin Dolphin, said in a research note.
BP shares ended 5% lower on Tuesday (Oct. 29), in part due to a slump in world oil prices to just over $71 a barrel from $75 a barrel on Friday. The stock price is down about 18% year-to-date, underperforming oil industry rivals as investors continue to question the firm’s long-term strategy.
The energy giant maintained its dividend at $0.08/share after raising it in the second quarter and plans to maintain the pace of its quarterly share buy-backs at $1.75bn despite the slump in profits. In addition, its previous guidance for at least $14 billion of share buybacks through 2025 at market conditions around bp’s fourth quarter 2023 results and subject to maintaining a strong investment grade credit rating, is currently unchanged, although as part of the update to its medium term plans in February 2025, the company intends to review elements of its financial guidance, including its expectations for 2025 share buybacks.
