BP Profit Nearly Quadruples on Refining Windfall

BP (LON: BP.) reported third-quarter underlying replacement cost profit of $8.46bn, up from $2.21bn a year earlier. The oil major beat a company-compiled analyst average of $7.33bn, Reuters reported.

BP shares were up 1.1% at 631.3p on a delayed quote at 8.08am, from yesterday’s close of 624.3p. They have traded between 626.9p and 635.4p today, just under a six-month closing high of 638.5p set on the 23rd of October.

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That compares with $5.73bn in the second quarter, and refining did the lifting. BP’s refining indicator margin averaged $46.7 a barrel, against $15.8 a year earlier, while Brent crude averaged $96.99 a barrel, up from $69.13. Refining and trading made an underlying pretax profit of $5.725bn, against $549m.

The customers and products division earned $6.95bn before tax, ahead of a $6.3bn average forecast, and the group’s profit was its highest quarterly figure since at least 2021, on BP’s own data. Reported profit was $4.70bn after $4.0bn of post-tax impairments, mostly on transition businesses.

Operating cash flow reached $14.83bn, from $7.79bn a year earlier. Net debt fell to $13.87bn from $22.25bn at the end of June, and gearing, the share of capital funded by debt, dropped to 14.8% from 22.6%.

Chief executive Meg O’Neill said the balance sheet remains the first job and that BP is still too leveraged. She set out where the surplus goes:

Our intent is now to prioritize the use of excess cashflow to address our remaining Deepwater Horizon liabilities in full.

Meg O’Neill, Chief executive officer, BP

BP guided to about $1.6bn of pre-tax Gulf settlement payments this year. The interim dividend is 8.66c, unchanged from the second quarter. No new buyback was announced, and net buybacks in the quarter were zero.

For the fourth quarter, BP expects the customers business to be significantly lower than in the third and products throughput of 1,160 to 1,210 thousand barrels a day. The roughly $6bn Castrol sale to Stonepeak is due to complete imminently, and BP will set out its capital framework on the 15th of December.