BP announced yesterday that its quarterly profit had dropped more than expected due to “weak” performances by its gas traders.
The London-based oil giant’s shares fell sharply after its underlying third-quarter net profit dropped by 60% to $3.3 billion. Oil and gas prices have also fallen from their highs of last year. The shares dropped 24p or 4.6 percent to 502 1/2p.
The FTSE 100 firm’s result fell far short of the analyst expectation of $4 billion. This has added to the company’s problems as it tries to recover from Bernard Looney’s sudden departure as CEO. The Irishman, 53, resigned from his position in September after admitting to misleading the board about past relationships.
BP has also revealed a one-off write-down of $540 million on its American offshore projects, after New York regulators rejected its request for higher prices in order to offset inflation.
Murray Auchincloss said that BP’s interim CEO, Murray Auchincloss had a “solid” quarter and would be buying back another $1.5 billion in its shares over the next three months.
BP’s profits were $28 billion, a record for the company. Oil and gas prices soared due to fears about supply shortages following Russia’s invasion in Ukraine. Brent crude, which is the benchmark oil price for the world, has been impacted by concerns about the global economy. Brent crude averaged $86.75 per barrel in the third quarter of this year, down from the $100.84 it was in the same time period last.
The UK benchmark gas price has fallen by even more than 71 percent, from 281p/therm on average in the third quarter 2022 when Russia cut off pipeline supplies to Europe to 82p/therm during the same period of this year.
Auchincloss (53), said BP’s traders of gas had enjoyed two “exceptional quarters” in the first half, but had performed less well in third quarter due to calmer markets. To make money, traders need volatility. “Europe was filling the gas storage and the US gas storage were very full so there was little volatility,” said he. Oil traders “had a strong quarter”, however.