BP has reported its weakest quarterly profits in almost four years owing to the slump in global oil prices and falling margins in its refinery business.
The oil company revealed underlying profits of almost $2.3bn for the July to September period, its lowest quarterly result since the last three months of 2020, when Covid travel restrictions caused oil prices to crash.
Although the figure was down about 28% year on year, it beat the forecasts of City analysts, who had predicted that the company would make just over $2bn in underlying profit for the July to September period.
The BP chief executive, Murray Auchincloss, revealed the better-than-expected earnings alongside plans to maintain the pace of its quarterly share buy-backs at $1.75bn despite the slump in profits.
Auchincloss, who was made BP’s chief executive in January this year, is under pressure to assure shareholders that he can grow the value of the company, which has lagged its oil industry rivals in recent years.
The company expects to sustain the shareholder distributions after hiking its net debt by $1.7bn over the last quarter to $24.27bn, the highest since the start of 2022, and setting out plans to cut at least $2bn of cash costs from the business by the end of 2026 relative to 2023.
The company also plans to keep investing in fossil fuels while focusing on the “opportunity afforded by the energy transition”, Auchincloss said on Tuesday.
The BP boss angered green groups earlier this month after reports emerged that he has dropped a target put in place by his predecessor Bernard Looney to reduce the company’s oil and gas output by 25% by 2030 as part of a plan to regain the confidence of fossil fuel investors.
Auchincloss added that the company had made “significant progress” since it laid out its new priorities earlier this year to make the company “simpler, more focused and higher value”.
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He added: “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 … I am absolutely clear that the actions we are taking will grow the value of BP.”
The company reported underlying profits of $3.2bn in the same period last year, when oil prices averaged $90 a barrel in part because of the 7 October attacks in Israel, which ignited ongoing conflict in the region. They were also weaker than the profits it reported in the previous quarter, which were $2.8bn.
Global oil prices are now about $71 a barrel despite the tensions in the Middle East and the ongoing war between Russia and Ukraine because of weak demand for crude from China, the world’s largest energy importer.
