The BP Share Price Dropped 5.3% on Q3 Earnings Miss Led by Gas

The BP plc (LON: BP) share price dropped 5.26% after releasing its third-quarter earnings results, which missed analysts' expectations. The energy giant’s $3.3 billion Q3 earnings missed analysts' estimates, triggering the decline in its share price.

The energy company’s replacement cost profit reached $3.3 billion, a significant increase from the $2.6 billion reported in the previous quarter. The surge in profitability can be attributed to several critical factors, including higher realised refining margins, reduced refining turnaround activities, powerful performance in oil trading, and increased oil and gas production.

However, the company reported that the above gains were somewhat offset by the relatively weak performance in gas marketing and trading. The weakness in gas prices affected the company’s profitability in a significant manner. 

In contrast to the second quarter of 2023, the reported profit for the third quarter was even more striking, standing at $4.9 billion compared to the much lower $1.8 billion Q2 2023 figure.

Robust financial metrics complemented the operational performance. Operating cash flow for the quarter reached $8.7 billion, reflecting a working capital release of $2.0 billion after accounting for inventory holding gains, fair value accounting effects, and other adjusting items.

Capital expenditure for the third quarter amounted to $3.6 billion, with BP anticipating capital expenditure, including inorganic capital expenditure, to be approximately $16 billion in 2023.

BP was actively engaged in share buyback programs during this period, with $2.0 billion completed in the third quarter. The company maintained its dividend payout at 7.27 cents per share and extended its $1.5 billion share buyback programme over the next three months. 

Murray Auchincloss, BP Plc’s interim CEO, said: “This has been a solid quarter supported by strong underlying operational performance demonstrating our continued focus on delivery. Momentum continues to build across our businesses, with recent start-ups including Tangguh Expansion, bpx energy's ‘Bingo' central processing facility and Archaea Energy's first modular biogas plant in Indiana. As we laid out at our investor update in Denver, we remain committed to executing our strategy, expect to grow earnings through this decade, and are on track to deliver strong returns for our shareholders.”

Shell share price. 

The Shell share price dropped 5.26% to trade at 497.57p from Monday’s closing price of 525.20p.