Oil and gas giant BP (LON: BP) has unveiled its lowest quarterly profits since Q4 2020, when the industry’s performance took a nosedive during the Covid-19 global pandemic.
In a trading update on Tuesday, BP posted an underlying replacement cost profit – its proxy for net profit – of $2.3 billion in its financial third quarter from July to September.
The figure represented a slump of over 30% on the $3.3 billion profit the company posted over the same quarter last year, and came in well below its second quarter takings of $2.8 billion.
BP attributed the decline in quarterly profits to lower oil demand, and the price environment in its wake impacting the company’s refining margins. Lower demand, especially from China, saw oil prices slump by over 17% in the third quarter.
BP’s net debt rose over the third quarter to $24.3 billion, up from $22.6 billion noted in the previous quarter. The company attributed the increase to lower operating cash flow, higher capital expenditures and lower divestment.
BP’s latest results follow a recent downward revision of its target to reduce oil and gas production by 2030 and a pullback from renewable energy projects, that underpin its ambitions of achieving net zero emissions by 2050 or sooner.
Commenting on the performance, Murray Auchincloss, CEO of BP, said: “We have made significant progress since we laid out our six priorities earlier this year to make BP simpler, more focused and higher value.
“In oil and gas, we see the potential to grow through the decade with a focus on value over volume. We also have a deep belief in the opportunity afforded by the energy transition – we have established a number of leading positions and will continue high-grading our investments to ensure they compete with the rest of our business.”
BP Shareholder Returns Intact For Now
Despite the lackluster performance, BP has kept shareholder returns intact for now. The company maintained its dividend at 8 cents per share after having raised it in the second quarter.
BP also said it would maintain the rate of its share buyback program at $1.75 billion over the next three months. Additionally, it said it is committed to announcing a further $1.75 billion share buyback in the fourth quarter.
However, BP noted that as part of a strategic update of its medium-term plans in February next year, it will “review elements of our financial guidance, including our expectations for 2025 share buybacks.”
The market appeared unimpressed by the FTSE 100 company’s latest performance update as its share price fell following the announcement of a slump in quarterly profits.
At 06:17 am EDT BP shares were down 2.4% or 9 pence to £3.89 ($5.05). The company’s share performance continues to trail U.K. rival Shell (LON: SHEL), and U.S. peers ExxonMobil (NYSE: XOM) and Chevron (NYSE: CVX).
Shell and Chevron will publish their results on Thursday, while Exxon will follow on Friday over a busy week of oil and gas sector financials. Investors would likely be looking out for clues in the quarterlies on how 2025 may potentially pan out for the industry’s biggest names.