BP has maintained its dividend payments and extended its $1.5 billion share buyback programme despite posting underwhelming profits for the three months to the end of September.
In its first set of results since former chief executive Bernard Looney resigned with immediate effect in September, BP reported underlying earnings of $3.3bn (£2.7bn). This missed market expectations of $4bn and was down from $8.2bn a year earlier.
While oil production was strong, BP said gas trading had been weak in recent months. High gas storage levels in the US and Europe have reduced price volatility compared to the first half of the year, limiting trading opportunities for the group's gas division.
READ MORE: BP: Oil giant under the cosh of takeover speculation
BP also took a $540m charge on two wind farm projects off the coast of New York after authorities rejected a request to renegotiate the terms of an associated power purchase agreement which ran into permitting delays that led to higher costs than originally anticipated. However, interim chief executive Murray Auchincloss said BP remains committed to offshore wind, particularly in basins such as the UK and Germany where it can use the electricity to supply its own facilities and charging networks.
Despite missing third quarter expectations, Mr Auchincloss said BP remains "on track to deliver" for shareholders.
"This has been a solid quarter supported by strong underlying operational performance demonstrating our continued focus on delivery," he said, adding: "As we laid out at our investor update in Denver, we remain committed to executing our strategy, expect to grow earnings through this decade, and on track to deliver strong returns for our shareholders."
The company kept its dividend unchanged at 7.27 cents per share and extended its $1.5bn share buyback programme over the next three months. It also said there was no change to its dividend guidance, which is based on an assumed cost for Brent crude oil of $60 a barrel.
READ MORE: BP chief in shock resignation over past relationships
The benchmark oil price averaged $86.75 a barrel in the third quarter, down from $100.84 a barrel in the same period last year when the war in Ukraine sent prices spiralling. Brent crude was trading at just above $88 a barrel on yesterday.
Mr Looney resigned as chief executive after he admitted failing to fully disclose past romantic relationships with colleagues when questioned about this by the board of directors. His departure amid a wave of mega-mergers in the US oil and gas industry has fanned speculation that BP could be a takeover target, though this possibility has been downplayed by Mr Auchincloss.
Jamie Maddock, energy research analyst at Quilter Cheviot, noted that BP is sticking with its strategy despite the "disappointing" results.
“The immediate impact of the Russian invasion of Ukraine has now worn off, and while geopolitical tensions are rising elsewhere, they haven’t moved the needle in energy prices significantly for it to translate to BP’s bottom line," Mr Maddock said.
"With central banks in developed economies determined to stay in a higher interest rate environment for longer and stump demand, it may be a volatile period for the oil and gas majors before we get any indication of a return to ‘normal’ economic conditions."
READ MORE: BP sees North Sea opportunities after posting $2.6bn profit
Updating on its operations in the North Sea, BP said it gained regulatory approval in September for the Murlach oil and gas field, a two-well redevelopment of the Marnock-Skua field. BP is 80% owner and operator of that project.
Also in September, BP and its partners in the Clair joint venture made the final investment decision to proceed with the construction and operation of the Shetland Crossover Pipeline to reinforce the UK's gas export network. BP is 45% owner and operator of that project.
While BP's third quarter profits were lower than predicted by analysts, earnings were up from $2.6bn in the previous three months. Operating profit from its mainstay business of oil and gas production was higher than consensus estimates at $3.1bn.
Shares in BP closed yesterday's trading in London 24.1p lower at 502.6p, a decline of nearly 4.6%.
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