BP slides into quarterly loss on huge charge over sale of assets
LONDON: BP slid into a net loss during the third quarter on a huge charge linked to the sale of assets, including its Alaskan business, the British energy giant said yesterday.
The London-listed business posted a loss after tax of $749 million (675 million euros) in the three months to September 30, compared with net profit of $3.35 billion in the third quarter of 2018, it said in a statement. BP added that it took a hit of $2.6 billion, having flagged a charge of $2-3 billion earlier this month.
However, the underlying picture was somewhat rosier despite a poor performance at its upstream division, which comprises exploration and production-and being hurt by weaker oil prices in the reporting period.
Replacement cost profit, a widely-watched measure which strips out exceptional items and changes in the value of oil inventories, stood at $2.3 billion, down from $3.8 billion a year earlier.
“The result was impacted by significantly lower upstream earnings, resulting from lower prices, maintenance and weather impacts,” BP said in Tuesday’s statement.
Shares in BP dropped 1.1 percent to 506 pence in morning deals. “This was not BP’s finest quarter, but overall the group remains on track,” said Richard Hunter, head of markets at online trading firm Interactive investor. “An average oil price of $62 for the quarter compared with $75 the previous year, driven by weak demand and the political situations in the likes of Iran and Venezuela.
“While this puts an immediate strain on profit, the level is comfortably above the $55 per barrel number which BP uses as a yardstick to break even,” he added.
BP had already revealed earlier this month that it would take a major hit this quarter, largely as a result of the $5.6-billion sale of its Alaska business to Hilcorp.
The third-quarter earnings release comes almost one month after BP announced the exit of chief executive Bob Dudley.
Dudley, 64, who oversaw the energy giant’s response to and recovery from the devastating Gulf of Mexico 2010 oil spill disaster, will leave next year.
The American will step down early next year to be succeeded by upstream division boss Bernard Looney, from Ireland. Under Dudley in 2018, BP bought mining giant BHP Billiton’s US shale oil and gas operations in a landmark $10.25-billion deal that energised the company’s output. He also embarked upon a $10-billion divestment programme in order to finance the blockbuster purchase. —AFP