BP has reported soaring earnings in its third quarter results after costs of oil and gas skyrocketed this year.
The oil giant reported underlying replacement cost profit of $3.3 bn, compared with $2.8bn for the previous quarter.
It credited this result to higher oil and gas realisations, higher refining availability and throughout “enabling the capture of a stronger environment and a stronger gas marketing and trading result.”
Reported loss for the quarter was $2.5bn, compared with a $3.1bn profit for the second quarter 2021. The firm said this was propelled by “significant adverse fair value accounting effects” of $6.1bn pre-tax, “primarily due to the exceptional increase in forward gas prices” recently.
That led to BP shares falling at the open, down 0.45 per cent to 355p.
The UK-based company also posted an operating cash flow for the third quarter of $6.0bn and $17.5bn for the first nine months of the year. This was compared with $5.2bn and $9.9bn for the same periods of 2020.
Chief executive officer, Bernard Looney, described the results as reflecting “another good quarter” for the firm.
He said: “Our businesses are generating strong underlying earnings and cash flow while maintaining their focus on safe and reliable operations.
“Rising commodity prices certainly helped, but I am most pleased that quarter by quarter, we’re doing what we said we would – delivering significant cash to strengthen our finances, grow distributions to shareholders and invest in our strategic transformation. This is what we mean by performing while transforming.”
Stuart Lamont, investment manager at Brewin Dolphin, said of the estimate-beating results:: “Underlying replacement cost profit – its preferred measure of profit or loss – is ahead of the second quarter of this year and well ahead of the same period in 2020, while debt has ticked down and cashflow is strong, buoyed by higher and more sustained commodity prices.
“A further share buyback and an attractive dividend are good news for shareholders, but this update being delivered during COP26 is a reminder that BP has a long road ahead of it in becoming a low carbon energy company.”
Walid Koudmani, market analyst at financial brokerage XTB said: “Investors may look favourably on today’s report as it highlights the company’s resilience and adaptability along with it’s prioritization of cash flow to strengthen its financial position.”