BP profits better than expected amid soaring energy prices

The prices of crude and gas have rocketed amid surging demand.

BP profits better than expected amid soaring energy prices iStock

Soaring oil and gas prices helped BP notch up a better-than-expected profit haul in the third quarter as the global economic recovery sends energy costs racing higher.

The oil giant said underlying replacement cost profits jumped to $3.3bn US dollars (£2.4 bn) in the three months to September 30, up from $86m US dollars (£63m) a year earlier when oil prices had slumped due to the pandemic.

Its third-quarter profits also mark a steep rise on the previous three months, when it notched up profits of $2.8bn US dollars (£2bn).

It unveiled another $1.25bn US dollars (£915m) of share buybacks, which it said will be completed before its full-year results announcement.

But, on a reported basis, BP tumbled to a $2.9bn US dollar (£2.1bn) quarterly loss as it booked a $6.1bn US dollar (£4.5bn) hit from the accounting treatment of soaring forward gas prices.

The oil giant’s replacement cost loss compares with losses of $644m US dollars (£471m) a year earlier, with the group blaming an accounting “mismatch”.

It said this is set to unwind if prices decline and as liquefied natural gas cargoes are delivered.

BP chief executive Bernard Looney said: “This has been another good quarter for BP – our businesses are generating strong underlying earnings and cash flow while maintaining their focus on safe and reliable operations.

“Rising commodity prices certainly helped, but I am most pleased that, quarter by quarter, we’re doing what we said we would – delivering significant cash to strengthen our finances, grow distributions to shareholders and invest in our strategic transformation.”

The prices of crude and gas have rocketed amid surging demand as the global economy has rebounded from the early days of the pandemic, while oil cartel Opec has increased production slowly after deep cuts made last year as the crisis struck.

BP and FTSE 100 Index rival Royal Dutch Shell have both enjoyed a boost to profits and delivered cheer to investors by increasing dividends and buying back shares.

BP has already completed the $1.4bn US dollar (£1bn) share buybacks announced at its second-quarter results, with another tranche also due to be announced at its full-year results early next year.

It said that, if Brent crude oil remains above $60 US dollars a barrel, the group should be able to buy back around $1bn US dollars (£732m) of shares each quarter and increase the dividend by 4% annually through to 2025.

BP also said it has continued paying down its debt, which had jumped in early 2020 amid the oil price collapse.

Its net debt stood at $32bn US dollars (£23bn), down from $32.7bn US dollars (£23.9bn) at the end of the second quarter.

STV News is now on WhatsApp

Get all the latest news from around the country

Follow STV News
Follow STV News on WhatsApp

Scan the QR code on your mobile device for all the latest news from around the country

WhatsApp channel QR Code