May 10, 2024 [The Globe And Mail]- BP PLC’s BP-N +1.36%increase first-quarter earnings plunged by 40 per cent to US$2.7-billion, missing forecasts after lower energy prices and a U.S. refinery outage offset increased oil and gas production.
The London-based company held its dividend at 7.27 US cents a share and maintained the rate of its share buyback program at US$1.75-billion over the next three months, similar to the previous quarter.
Profit fell 5-per-cent short of analyst forecasts, denting efforts by chief executive Murray Auchincloss to steady the company after a bruising period that followed the abrupt resignation of predecessor Bernard Looney in September.
Mr. Auchincloss, who was head of finances under Mr. Looney, has vowed to simplify BP’s operations and cut costs in the face of investor doubts over plans to reduce the company’s focus on oil and gas and expand a low-carbon business.
BP on Tuesday introduced a target to deliver cash cost savings of at least US$2-billion by the end of 2026 relative to 2023.
Shares in the company were down 1.9 per cent Tuesday afternoon, compared with a 0.5-per-cent drop for the European energy index.
First-quarter underlying replacement cost profit, the company’s definition of net income, missed the US$2.87-billion consensus forecast from analysts polled by the company and was well short of a US$3-billion profit in the previous quarter and US$5-billion a year earlier.
BP beat earnings forecasts in the previous quarter but had missed them in the previous two.
The results reflected lower energy prices and the impact of the outage at its Whiting refinery in Indiana, which was partially offset by a strong oil trading result, higher refining margins and oil and gas output.
Oil and gas production was up 2.1 per cent from a year earlier at 2.38 million barrels of oil equivalent a day on the back of field startups in Azerbaijan and the United States.
“They’re seeing good operational momentum,” Mr. Auchincloss told Reuters.
BP’s cash flow was down 34 per cent at US$5-billion after restocking of diesel and gasoline stocks ahead of summer, Mr. Auchincloss said.
The company’s debt rose to US$53-billion while its debt-to-market capitalization ratio rose to 22 per cent from 19.7 per cent in the previous quarter.
The earnings miss was a result of higher tax rate and interest expenses versus expectations, HSBC analyst Kim Fustier said.
The miss “is not what BP bulls may have been hoping for, especially after Shell’s impressive 20 per cent beat last Thursday” on the back of strong trading and refining, Ms. Fustier said.
Rival Exxon Mobil also missed earnings forecasts, while Chevron and TotalEnergies both met expectations. All three reported sharp drops in profit owing to lower natural gas prices.
Saudi Arabia’s state-owned oil giant Aramco on Tuesday reported first-quarter net profit of US$27.3-billion, down 14 per cent from a year earlier.
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