BP profits drop to US$2.7bil, refinery outage offsets higher output

LONDON: BP reported on Tuesday first-quarter earnings of $2.7 billion, down 40% from a year earlier and missing forecasts due to lower energy prices and a U.S. refinery outage, even as oil and gas production increased.

The London-based company held its dividend at 7.27 cents per share and maintained the rate of its share buyback programme at $1.75 billion over the next three months, similar to the previous quarter.

The earnings fell 5% short of analysts’ forecasts, denting CEO Murray Auchincloss’ efforts to steady the company following a bruising period that followed the abrupt resignation of CEO Bernard Looney last September for failing to fully disclose details of past personal relationships with colleagues.

Auchincloss, who was head of finances under Looney, has vowed to simplify BP’s operations and cut costs in the face of investor doubts over the company’s plans to reduce its focus on oil and gas and expand a low-carbon business.

BP introduced on Tuesday a new target to deliver cash cost savings of at least $2 billion by the end of 2026 relative to 2023.

BP shares were down 0.3% at the opening of London trading.

The first-quarter underlying replacement cost profit, the company’s definition of net income, of $2.7 billion, missed the forecast of $2.87 billion in a company-provided survey of analysts.

That compared with a $3 billion profit in the previous quarter and $5 billion a year earlier.

BP beat earnings forecasts in the previous quarter but had substantially missed them in the previous two.

The results reflected lower energy prices and the impact of the Whiting, Indiana, refinery outage and a significantly weaker fuels margin, BP said. These factors were partially offset by significantly lower level of turnaround activity at BP facilities as well as a strong oil trading result and higher realised refining margins.

BP’s oil and gas production rose by 2.1% from a year earlier to 2.38 million barrels of oil equivalent per day.

BP is the last among the top Western oil giants to report first quarter results. Last week Shell reported net profit of $7.7 billion, exceeding expectations as disruption to Red Sea shipping and Russian refining boosted oil trading.

Rivals Exxon Mobil, Chevron and TotalEnergies reported a drop in profits from a year earlier, reflecting a sharp downturn in natural gas prices.

Saudi Arabia’s state-owned oil giant Aramco on Tuesday reported first-quarter net profit of $27.3 billion. – Reuters