BP Profit Misses Estimates on Weak Gas Trading

But Oil Trading Segment Had a ‘Very Strong’ Q3
BP sign
(Christopher Pike/Bloomberg)

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BP Plc’s third-quarter profit rebounded from the prior period but fell short of estimates as weak results in gas marketing offset a strong performance in oil trading.

Shares of the company fell 4.1% to 505.2p as of 8:03 a.m. in London.

Like its Big Oil peers, BP’s earnings were well below last year’s record levels yet high by historical standards as geopolitical tensions keep energy prices elevated. The huge cash inflows have stimulated a spate of deal-making, with Exxon Mobil Corp. and Chevron Corp. announcing a pair of acquisitions totaling more than $100 billion over the past month — widening their lead over Europe’s majors.

BP’s third-quarter adjusted net income was $3.29 billion, down from $8.15 billion a year earlier, but up from $2.59 billion in the prior period, the company said in a statement on Oct. 31. The figure was well below the average analyst estimate of $4.05 billion. The quarterly share buyback was maintained at $1.5 billion.

This is “a disappointing set of numbers,” Redburn Atlantic analyst Stuart Joyner said in a note. He had been hoping for a small increase in the buyback to $1.75 billion, given the strong macroeconomic backdrop.

BP’s oil trading unit had a “very strong” quarter, according to the statement. In contrast, gas trading and marketing was “weak” after having had an “exceptional” start to the year. Refining availability rose by 2 percentage points from a year earlier to 96.3%, but margins fell, and the company expects them to weaken further in the fourth quarter.

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Despite the miss on profit, BP’s debt pile resumed its downward path. Net debt fell by $1.3 billion to $22.3 billion.

The earnings of BP’s European peers TotalEnergies SE, Equinor ASA and Eni SpA came in ahead of expectations last week. In contrast, Exxon and Chevron missed estimates.

“We remain committed to executing our strategy, expect to grow earnings through this decade, and are on track to deliver strong returns for our shareholders,” said Murray Auchincloss, who became interim CEO of BP after the surprise resignation of Bernard Looney.