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BP scrapes back into profit as it focuses on new strategy

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BP PLC (LON:BP.) posted a tiny profit in its latest quarter as chief executive Bernard Looney said its main priority is to execute its new strategy.

The FTSE 100 oil major, which is in the process of a transition away from fossil fuels, reported a replacement cost net profit of US$0.1bn in the three months to end September 2020 compared to an underlying US$6.7bn loss in the previous quarter.

In the quarterly results statement, Looney noted: “Major projects are coming online, our consumer-facing businesses are really delivering and we remain firmly focused on cost and capital discipline. 

“Importantly, net debt continues to fall. We are firmly committed to our updated financial frame, including the dividend – the first call on our funds.”

The new strategy has seen BP’s dividend reduced to 5.25 cents per share while over the next ten years the company intends to increase low carbon investments 10-fold through a US$5bn a year investment into renewables, bioenergy and early positions in hydrogen and carbon capture.

In the latest quarter and stripping out one-off benefits of disposals and tax, BP saw a loss of US$0.45bn with the performance again affected by lower crude prices and weak refining margins.

Upstream or production operations recovered to profits of US$878mln but marketing and refining’s contribution more than halved to US$636mln and losses grew at Russian associate Rosneft to US$177mln.

Net debt fell to $40.4bn at quarter-end and is expected to fall further in the fourth quarter as divestment proceeds are received, said BP.

As part of its strategy overhaul, BP has cut 10,000 staff, of which 2,800 have left already, it said, with the majority to have gone by the end of the year.

Costs of this programme are expected to be US$1.4bn over the next 1-2 years, primarily in 2020.

Organic capital expenditure is on track for the revised full-year target of around $12bn, said BP,  while the sale of its petrochemicals business to Ineos for US$5bn should complete by the end of 2020.

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