Cleaner, greener BP defies doom warnings to post surprise profit

Simon Freeman
·2-min read
Reuters
Reuters

Big Oil’s earnings season got off to a better-than-feared start today as BP defied analyst expectations to post a surprise £66million profit.

Third-quarter results beat a consensus forecast of a £90million loss, and are a considerable improvement on April-to-June’s £5.1bn wipeout, which saw dividends - until recently the third largest in the FTSE 100 - slashed for the first time in a decade.

The London-based supermajor’s mammoth $40.9bn debt was shaved by $500m but still remains well above the $35bn target set as a trigger-point for a return to higher shareholder rewards.

Shares rose 3.1% to 206.25p this morning, down from 480p at the start of the year.

The vast profits from its massive oil trading operation, which cushioned Q2’s results, fell back significantly amid softening market volatility, while the continued drag in demand for fuel has crushed margins from refining crude to historic lows.

But increased sales at petrol station forecourts, largely driven by Asia’s recovery from the pandemic, alongside helped avert a second consecutive quarterly loss.

It has set out on a strategic shift to increase green spending tenfold with major investment in renewable power, net-zero emissions and a 1-million barrel-a-day production cut by 2030.

Meanwhile, the total market value has fallen by half to around $53 billion since January, and it is now at the midpoint of a re-organisation announced in June to slash 10,000 of 70,100 jobs.

BP CEO Bernard Looney said: “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.”

BP is the first of the Big Five oil companies to report this season, with Royal Dutch Shell announcing on Thursday and Total, Exxon and Chevron posting earnings the following day.