Oil major BP misses estimates for third quarter as profits plummet

LONDON — Oil major BP on Tuesday reported a steep year-on-year fall in profits, missing analyst estimates.

The British energy giant logged underlying replacement cost profit, used as a proxy for net profit, of $3.293 billion in the third quarter. This was a drop from $8.15 billion over the same period last increase, but an increase from the $2.59 billion of profit recorded in the second quarter.

Analysts had expected profit to come in at $4.059 billion in the third quarter, according to a collection of estimates by LSEG.

BP’s London-listed shares fell 4% in early trade.

Quarterly growth came from a rise in oil and gas production and higher realized refining margins, along with a “very strong oil trading result,” BP said. This was partially offset by a weak gas marketing and trading result.

The company flagged impairments of impairments of $1.2 billion, including a pre-tax $540 million impairment charge related to U.S. offshore wind projects.

Capital expenditure was $3.603 billion, compared with $4.314 billion in the previous quarter. Operating cash flow was higher both quarterly and year-on-year, at $8.747 billion.

BP also announced a $1.5 billion share buyback to be executed ahead of fourth quarter results.

“Looking divisionally, despite some solid operational indicators, earnings missed across all divisions,” Biraj Borkhataria, associate director of European research at RBC Capital Markets, said in a note.

Borkhataria added that while the headline 20% net profit miss may come as a surprise, BP has seen “exceptional gas trading results on several occasions in the last couple of years, including last quarter.”

The year-on-year profits of BP and other energy majors plunged in the second quarter, following weaker fossil fuel prices that have since risen sharply. BP and others reported record annual profits in 2022.

In…