Share

BP profits slump on sliding oil prices

London - BP profits slumped in the third quarter on sliding oil prices and a drop in the ruble linked to Western sanctions against Russia, the British energy group said on Tuesday.

Net profit tumbled 63% to $1.29bn (€1.0bn) in the three months to the end of September, compared with the outcome For the equivalent period in 2013, BP said in an earnings statement.

BP, which owns almost 20% of Russian oil major Rosneft, said that "depreciation of the ruble against the dollar over the period had a significant impact on" performance in Russia.


Oil prices have fallen sharply since the middle of June owing to a global supply glut, which prompted US bank Goldman Sachs to say on Monday that it had slashed its price forecasts for the next two years..

BP chief executive Bob Dudley however said in Tuesday's results statement that despite "lower oil prices" and a plunge to quarterly profits, the oil major was "well on track" to hit its full-year targets.

Group net profit tumbled 63% to $1.29bn in the three months to the end of September, compared with the outcome for the equivalent period in 2013, BP said in an earnings statement.

Profit adjusted to reflect the value change in oil inventories retreated to $2.39bn from $3.18bn in the reporting period. Production fell 2.7% to 2.14 million barrels of oil equivalent, partly because of maintenance projects.

During the third quarter, BP learned that it potentially faces billions of dollars in new fines after a New Orleans judge concluded it had acted with "gross negligence" ahead of the massive 2010 Gulf of Mexico oil spill.

BP reiterated in Tuesday's statement that it intends to appeal the ruling.

READ: BP asks judge to reconsider ruling

"The strength of sterling, the weakness of the oil price, the sanctions on Russia, coupled with the sharp drop of the ruble, and the ongoing uncertainty as to a final figure on the Gulf of Mexico settlement have all weighed on the company and may well have crushed a lesser force," said Richard Hunter, head of equities at Hargreaves Lansdown Stockbrokers.

"BP's response has been to generate strong cashflow, enabling an increase to the dividend and a continuation of the buyback programme, a reduction in capital expenditure and an improved downstream performance, driven by an improved refining environment," Hunter added in a note to clients.

BP's share price gained 0.40% to stand at 431.95 pence in morning deals on London's benchmark FTSE 100 index, which was up 0.38% at 6 387.73 points.

Russia's ruble has meanwhile been falling to all-time lows against the dollar and euro in recent weeks as the spillover from the Ukraine crisis and falling oil prices pummel the country's economy.

On Tuesday, the ruble fell to new record lows of 54.04 to the euro and 42.50 to the dollar.

BP said on Tuesday that underlying net income earned from its stake in Rosneft slumped to $110m in the third quarter from $808m one year earlier.

We live in a world where facts and fiction get blurred
Who we choose to trust can have a profound impact on our lives. Join thousands of devoted South Africans who look to News24 to bring them news they can trust every day. As we celebrate 25 years, become a News24 subscriber as we strive to keep you informed, inspired and empowered.
Join News24 today
heading
description
username
Show Comments ()
Rand - Dollar
18.89
+0.2%
Rand - Pound
23.84
+0.2%
Rand - Euro
20.36
+0.4%
Rand - Aus dollar
12.31
+0.3%
Rand - Yen
0.12
+0.2%
Platinum
908.05
0.0%
Palladium
1,014.94
0.0%
Gold
2,232.75
-0.0%
Silver
24.95
-0.1%
Brent Crude
87.00
+1.8%
Top 40
68,346
0.0%
All Share
74,536
0.0%
Resource 10
57,251
0.0%
Industrial 25
103,936
0.0%
Financial 15
16,502
0.0%
All JSE data delayed by at least 15 minutes Iress logo
Company Snapshot
Editorial feedback and complaints

Contact the public editor with feedback for our journalists, complaints, queries or suggestions about articles on News24.

LEARN MORE
Government tenders

Find public sector tender opportunities in South Africa here.

Government tenders
This portal provides access to information on all tenders made by all public sector organisations in all spheres of government.
Browse tenders