British oil and gas company BP’s underlying profit fell slightly in the third quarter to $2.21 billion (CZK 46.7 billion) from $2.27 billion in the same period last year. However, the results exceeded analysts’ expectations of USD 2.02 billion thanks to higher refining margins, which partially offset the impact of lower oil prices. The company announced this in a press release today.
Financial results and management strategy
Core earnings are operating earnings after taking into account production restoration costs and excluding one-off items. In the oil industry, they are often used as the main indicator of profitability.
The results suggest that CEO Murray Auchinclos’s turnaround plan is beginning to bear fruit. The plan aims to regain investor confidence by focusing on oil and gas production, selling assets that are not considered strategic, and reducing costs.
Market context and next steps
European competitors Shell and TotalEnergies also saw their third-quarter profits decline due to lower oil prices. The average price of Brent crude oil fell 13 percent year-on-year during the quarter. Auchincloss said he expects the value of completed or announced asset sales for this year to be around $5 billion. The company has not yet announced anything new regarding the closely watched sale of its Castrol lubricants division, which is the main focus of its $20 billion asset program.
BP is trying to regain investor confidence as its financial results lag behind its rivals. In 2020, it unveiled a long-term strategy that set out a shift away from fossil fuels and a rapid increase in renewable energy production. However, it gradually scaled back its original plans and announced at the beginning of this year that it was definitively abandoning its strategy of reducing hydrocarbon production and would instead focus more on oil and gas extraction.
Source: ČTK
