BP has reported a near-quadrupling in third-quarter profit to $8.5bn (£6.3bn), driven by soaring margins from fuel supply disruption caused by the war in Iran. The FTSE 100 energy giant's earnings comfortably surpassed analyst expectations.
Debt reduction and Castrol disposal
The company has cut its debt by half over the past year to $13.9bn, with further reductions anticipated following the $6bn proceeds from the disposal of lubricants business Castrol.
The news helped push shares up 1.4 per cent to 633p in early trading on Friday. The stock has now climbed 44 per cent since the beginning of the year.
Industry-wide adaptability
The figures mirror those of London-listed rival Shell, which on Thursday announced a more than doubling of third-quarter profit to $12.1bn.
"The industry as a whole has been showing remarkable adaptability," chief executive Meg O'Neill said. "Refineries have been running close to capacity to make up for shortfalls, shipping has been taking different and longer routes, and releases from strategic and commercial reserves are helping to bridge supply gaps."
Shift back to oil and gas
BP recorded writedowns of $5bn on its low-margin renewables division as the firm shifted its focus back towards its more lucrative oil and gas operations. Ashley Kelty, analyst at Panmure Liberum, said the move offers "further evidence that the net zero pivot has been highly value destructive."
Earlier this year, the company cut its planned transition capital expenditure by more than $5bn annually, setting a revised target of up to $2bn. O'Neill, who assumed the helm in April and has been scaling back its green strategy, is set to deliver her first major strategy update in New York in December.
"While operational performance remains robust and cash generation healthy, the key debate remains whether management can restore confidence in the longer-term direction of the company," Kelty said. "Investors will continue to worry about board disharmony after rumours over some execs keen on breaking business up, with others opposing this idea. Either way, the company has to demonstrate it has a vision for delivering higher shareholder returns in order to close the value gap between BP and peers."
