BP Profit Falls, but It Still Sees ‘Potential to Grow’ in Oil and Gas

image

The energy giant’s chief executive, Murray Auchincloss, has taken a profit-oriented approach and said in an interview that the company’s “principal aim” was increasing earnings.

BP’s share price fell more than 3 percent on Tuesday after the energy giant reported its lowest quarterly earnings in almost four years and suggested it might change its generous share buyback policy.

The falling profit comes as producers adjust to turbulence in the oil market caused by oversupply and falling demand in China, as well as rising tensions in the Middle East.

For the third quarter, BP’s adjusted earnings were $2.3 billion, down from $2.8 billion in the second quarter and $3.3 billion in the period a year earlier. Though still substantial, profit fell partly because of lower oil prices. BP, which is based in London, also said trading in oil, usually a strength at the company, was “weak” during the quarter.

Murray Auchincloss, who took over as chief executive a year ago after his predecessor, Bernard Looney, left over personal relationships with employees, has struggled to bolster the company’s share price, which has fallen about 26 percent over the past year.

Mr. Auchincloss is taking a more hard-nosed, profit-oriented approach than Mr. Looney, who aimed to gradually reduce oil and gas production, usually the big money earners at a company like BP, and rapidly build up renewable energy businesses like offshore wind.

“We’re trying to grow cash flow for the corporation through the decade, that is the principle aim we have, “ he said in an interview on Tuesday. In a statement, Mr. Auchincloss said BP saw “the potential to grow” in oil and gas through the decade.

BP is moving ahead with a large oil project in the Gulf of Mexico called Kaskida, and it is considering adding to its positions in Iraq and Azerbaijan, two large petroleum producing nations where it is already a big player.

Mr. Auchincloss also said that BP would continue to invest in lower emissions businesses because “our customers want lower carbon energy over time.” But he signaled that BP would mainly focus on areas like electric vehicle charging and biofuels, where he thinks the company could make the highest profits.

He added that BP would continue to participate selectively in businesses like offshore wind, where it has taken write-offs, but through partnerships or financial structures that reduced capital needs. BP also says it is selling a large portfolio of land-based wind farms in the United States.

BP’s earnings, while down, actually topped analysts’ forecasts. Investors may be more concerned that the company will pare back the generous stock buybacks that have become commonplace at large energy firms and in some cases look unsustainable with oil prices stuck at relatively modest levels. A cut to buybacks “looks inevitable for 2025,” Alastair Syme, an analyst at Citigroup, wrote in a note to clients on Tuesday.

BP said on Tuesday that it would review “expectations for 2025 buybacks” next year, although it said it would repurchase $1.75 billion in stock after the third quarter and the same amount after the fourth quarter of 2024.

Share this article:
Previous Post: Jeff Bezos, Jay Powell, Serena Williams and More Will Speak at the DealBook Summit

October 29, 2024 - In Altman, Samuel H, Amazon.com Inc, Assn of Flight Attendants, Bezos, Jeffrey P, Clinton, Bill, Cooper, Alexandra (1994- ), Eli Lilly and Company, Fain, Shawn, Federal Reserve System, Griffin, Kenneth C, internal-storyline-no, Jazz at Lincoln Center, Massachusetts General Hospital, OpenAI Labs, Pichai, Sundar, Powell, Jerome H, Serena Ventures, United Automobile Workers, Williams, Serena

Next Post: What to Do When Business is Slow

October 29, 2024 - In Advice & Insights

Related Posts

Leave a Reply