Energy giant BP reported a 41% fall in third-quarter net profits on Tuesday, citing lower upstream earnings, weaker oil prices and maintenance and weather impacts.
BP posted third-quarter underlying replacement cost profit, used as a proxy for net profit, of $2.3 billion, versus $2 billion, according to data from Refinitiv. That compared with a profit of $3.8 billion over the same period a year earlier and $2.8 billion in the second quarter of 2019.
The results show that the U.K.-based oil and gas company still managed to beat analyst expectations, despite a sharp drop in third-quarter net profits.
Shares of BP dipped 0.5% shortly after the opening bell.
Here are the key points:
- Underlying replacement cost profit, used as a proxy for net profit, for the third quarter of 2019 was $2.3 billion, compared to $3.8 billion a year earlier.
- The third-quarter results, despite beating analyst expectations of $2 billion, represent a fall of 41% when compared to the same period a year earlier.
- A dividend of 10.25 cents per share was announced for the quarter.
“Overall, it has actually given us a strong set of underlying earnings but, more importantly, strong operating cash — which has allowed us to stabilize debt this quarter,” BP CFO Brian Gilvary told CNBC’s “Squawk Box Europe” on Tuesday.
Gilvary said that while oil prices were “pretty finely poised,” crude futures seemed to be stabilizing somewhere around $60 a barrel.
“I think that sets us up well given we have got the company back into balance at $50 a barrel about two and a half years ago. So, therefore, we start to generate more surplus cash (and) that surplus cash will help us pay down the debt,” he added.
Brent crude prices have fallen almost 20% since an April peak, while WTI prices are down more than 15% over the same period.
Dudley to step down
The report comes shortly after CEO Bob Dudley, who has worked with BP for 40 years and held the position of CEO for almost a decade, announced he would be soon be stepping down from his role.
Dudley will be replaced by the current upstream chief executive, Bernard Looney, following the delivery of the firm’s 2019 full-year results on February 4, 2020.
A BP company logo at a gas station in London, U.K.
Chris Ratcliffe | Bloomberg | Getty Images
In September, Dudley said BP would look to sell some of its most carbon-intensive projects, and reduce investment in others, to try to improve the firm’s environmental footprint.
The energy giant has been targeted by climate activist groups on numerous occasions in recent months, with demonstrators increasingly angry about the lack of progress toward a lower-carbon future.
Shares of BP are down more than 4% from the same period in 2018, with weaker energy prices and sluggish global demand seen as likely to weigh on the oil industry as major energy companies report third-quarter earnings.