BP's profit slump amid downturn but giant sees oil and gas future

The FTSE 100 giant, which remains a key North Sea player, said profits tumbled by nearly a third in the last quarter to some £1.75 billion, as a slump in refining margins weighed on income. It reported an underlying replacement cost profit of $2.27bn (£1.75bn) for the third quarter, which beat analysts’ expectations but came in lower than the $2.76bn (£2.15bn) generated in the second quarter.

The latest third-quarter profit figure represents a slump of more than 30 per cent from the $3.3bn (£2.54bn) reported for the same period a year earlier.

The figures come amid a push by BP’s Canadian chief executive Murray Auchincloss to boost performance at the energy major amid a slump in its share price of late. That has included a move to scale back the firm’s renewable energy plans and focus on oil and gas to regain investor confidence.

BP said it has picked out more than $500 million in cost cuts for next year, as part of a $2bn savings drive expected by the end of 2026.

Auchincloss said: “We have made significant progress since we laid out our six priorities earlier this year to make BP simpler, more focused and higher value. In oil and gas, we see the potential to grow through the decade with a focus on value over volume.

“We also have a deep belief in the opportunity afforded by the energy transition - we have established a number of leading positions and will continue high-grading our investments to ensure they compete with the rest of our business. I am absolutely clear that the actions we are taking will grow the value of BP.”

The slide in margins comes partly as a result of a more general downturn in global demand for oil recently, across consumer and industrial sectors, as Brent crude prices remain significantly down since the start of 2024. That is despite escalating tensions in the Middle East and fears over how the conflict could affect energy sites in the region.

BP held its dividend to shareholders steady at 8 cents (6.17p) per share while it kept the rate of its share buyback programme unchanged at $1.75bn over the next three months.

Adam Vettese, market analyst at investment platform eToro, said: “Despite posting its worst quarter in almost four years, the numbers actually came in ahead of analysts’ expectations which should soften the blow for shareholders. BP’s transformation strategy to green energy has come under scrutiny and will continue to be under the microscope following today’s update.”

Tessa Khan, executive director at Uplift, which backs a “rapid and fair transition” away from oil and gas production, said: “These profits are a good reminder that, despite complaints by the oil and gas industry that they are too heavily taxed, companies are in reality awash with cash. It is absolutely right that they pay their fair share while the UK transitions away from expensive oil and gas.”