Show the full website

EnergyWatch

BP books modest Q3 profit

The British oil company has avoided the kind of impairments that dragged its results into negative territory in this year's second quarter, achieving, rather, a small profit after a period with only minor fuel demand recovery.

Photo: BP

"Performing while transforming," writes the top banner of the oil and gas supermajor's latest interim financial statement.

Even though BP's presentation doesn't exactly exude satisfaction, the slogan might be on to something.

In any case, the company succeeded in achieving a small profit in the midst of the Covid-19 pandemic and the now-abating oil price crisis – all while BP reports being underway in transforming its portfolio toward a more sustainable direction.

Compared to a negative adjusted result in the preceding quarter, BP landed Q3 profit of USD 100 million this time around.

The British supermajor is the first among the world's Big Oil companies to publish its third quarter interim report, which makes it all the more noteworthy to have booked a black bottom-line figure.

BP's adjusted result, measured as underlying replacement cost profit, comprises the common reference point most analysts use to gauge the group's performance.

Quants at market data firm Refinitiv had forecast that BP would lose USD 347 million during the period, but this outlook has been largely put to shame.

BP underlines that its success can be traced to oil and gas prices, which have been rising during the third quarter after having taken a steep dive when the coronavirus pandemic spread throughout the world this spring.

Avoided new major impairments

Comparing this year's Q3 with the same period last year, the group did experience a larger retreat. BP's third-quarter adjusted result last year totaled to USD 2.3 billion.

Looking at the cold numbers, BP actually booked a deficit of USD 0.5 billion, but that should be held relative to a loss of USD 16.8 billion from the quarter prior.

The company points out that this difference reflects the fact that it was not obliged to make any big impairments, neither for exploration nor for extracted commodities, as was the case in the preceding quarter.

Shaves off a little debt

Stakeholder dividends come to USD 0.0525 for the period – the same rate as in Q2, when BP chose to halve the payout as a way to ride out the worst of the storm.

"Having set out our new strategy in detail, our priority is execution and, despite a challenging environment, we are doing just that – performing while transforming. Major projects are coming online, our consumer-facing businesses are really delivering and we remain firmly focused on cost and capital discipline," writes BP Chief Executive Berhard Looney in a stock exchange notice on the interim report.

Debt, however, holds steady around USD 40.4 billion, albeit a half billion dollars less than in Q2.

The group has, among other things, stated its ambition to reduce annual expenses by USD 2.5 billion ahead of next year's close relative to 2019.

More legs to stand on

BP became the first of the supermajors to present a climate-neutrality target for 2050.

The company is maintaining this process, and as a part of the transition, BP opted to enter, for instance, an offshore wind partnership with Norway's Equinor from early September.

Over the coming five years, BP plans to multiply its investments in low-carbon energies tenfold, coming to roughly USD 5 billion per annum.

The group also aims to have 50 GW of renewable capacity by 2030 – or 20 times the figure in 2019.

However, this hardly means a moratorium on new major oil projects, as has been emphasized in recent months. 

During Q3, BP launched two big upstream undertakings, Khazzan Phase 2 in Oman and Atlantis Phase 3 in the Gulf of Mexico.

English Edit: Daniel Frank Christensen

Second-wave coronavirus still keeping oil market low

BP's market value drops to 26-year low 

Receive newsletter from EnergyWatch today

NB: Subscribing to the newsletter is free.

More from EnergyWatch

Jobs

See all jobs