30 Oct Optimism persists at BP despite 40% profit drop in Q3
BP’s profits in the third quarter took a significant hit after taking a one-off US$2.6 billion charge linked to asset sales, however outgoing chief executive Bob Dudley said underlying cash flow and earnings remained strong in the period.
The $2.6 billion charge resulted in a $700 million net loss, against a backdrop of difficult conditions across the global energy industry, as the ongoing US-China trade war continues to impact oil demand.
The British oil giant’s underlying replacement cost profit (the company’s definition of net income) fell by 40% from the third quarter of 2018 to $2.3 billion, although cash flow from operations was unchanged at $6.1 billion, despite a 17% drop in oil prices.
“In a challenging quarter for energy, BP’s results are remarkably resilient,” said Bernstein analyst Oswald Clint. In a further sign of confidence, BP eliminated a scrip dividend for the quarter which allows investors to get shares instead of cash – a measure used during the industry downturn.
BP’s oil and gas production was also affected by a tropical cyclone in the US Gulf of Mexico, which contributed to a 2.5% production decrease in the quarter. Hurricane Barry disrupted production in the region for two weeks and necessitated maintenance work at several high margin fields.