BP Profit Signals Turnaround Is Gathering Pace
British Energy Giant Posts Q3 Income of $2.21 Billion
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BP Plc’s profit exceeded expectations, with operational improvements and higher oil and gas production outweighing lower prices, as the company’s turnaround plan builds momentum.
The British energy giant posted adjusted third-quarter net income of $2.21 billion, higher than the average analyst estimate of $1.98 billion. Its quarterly share buyback plan was maintained and net debt rose slightly.
The results signal CEO Murray Auchincloss is starting to deliver a turnaround plan to win back investor confidence by focusing on oil and gas production, selling non-strategic assets and cutting costs.
“We continue to make good progress to cut costs, strengthen our balance sheet and increase cash flow and returns,” Auchincloss said in BP’s earnings statement. “We are looking to accelerate delivery of our plans, including undertaking a thorough review of our portfolio.”
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BP shares were little changed in London trading, as crude prices declined.
BP’s plan to divest $20 billion of assets by the end of 2027 to improve the balance sheet still includes expectations of a transaction for lubricants business Castrol, Auchincloss said in an interview on Bloomberg TV. The firm also raised its disposal expectations for 2025, saying proceeds will exceed $4 billion after previously guiding between $3 to $4 billion.
Quarterly share buybacks were held at $750 million, a reduced level BP announced earlier this year along with a strategic reset. Gearing — a ratio of net debt to equity that analysts have flagged as elevated compared to peers — ticked higher to 25.1%, from 24.6% in the previous quarter.
Even though the company returned to focusing on fossil fuels, BP said its full year reported upstream production is expected to be slightly lower than last year. But in a telephone interview on Nov. 4, Auchincloss said “maybe we’ll do better than that, but we don’t want to say that quite yet.”
Auchincloss highlighted improved asset operating availability during the interview. That’s something BP had struggled with in 2024, particularly with its key U.S. refinery near Chicago.
“BP’s results highlight some good operational momentum across its key divisions,” Biraj Borkhataria, head of European energy research at RBC Capital Markets, said in a note on Tuesday.
3Q highlights: Strong operations and strategic progress and we’ve delivered good earnings and cash flow. — bp (@bp_plc)
BP is the last of the so-called supermajors to post third-quarter earnings. Rivals Exxon Mobil Corp., Chevron Corp. and Shell Plc also exceeded expectations, while TotalEnergies SE reported profit that was in-line with estimates. The stocks of the two London-based companies have outperformed rivals this year, with BP leading since midyear.
In an effort to boost profits, the energy giants have cut jobs and costs, while seeking to boost production. They face a more challenging outlook next year, with the oil market headed for oversupply after the OPEC+ alliance unleashed more production to reclaim market share. Brent crude has lost 13% so far this year, set for its third annual decline and the worst yearly rout since 2020, when the pandemic precipitated the market into a crash.
Saudi Aramco posted a surprise increase in third-quarter profit as a production boost helped the world’s biggest oil-producing company break a years-long streak of falling earnings.
Operations Improve
Analysts highlighted that underlying cash flow from operations of $6.88 billion also came in higher than expected, a sign of stronger operating efficiency and cost control.
Still, operating expenses fell just 2% in the quarter compared to the same period last year, “suggesting there is still more work to be done on cost savings,” Joshua Stone, head of European energy research at UBS Group, said in a note.
Auchincloss sees digitization and artificial intelligence driving down operating spending, along with savings from procurement improvements, he said in the interview. BP is “probably about 40% of the way” toward its goal of reducing $4 billion to $5 billion of structural costs by 2027, he added.
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Despite weaker oil trading, BP’s refining and trading division reported earnings slightly up compared to the previous quarter, with the U.K. company benefiting from higher refining margins, Borkhataria noted.
Auchincloss was especially keen on the exploration and production enhancements, complete with a dozen discoveries this year including what he said was the unexpected find off the coast of Brazil, BP’s largest in a quarter century.
In the Middle East, BP’s plans in the giant Kirkuk field took another step after the Iraqi government “activated our contract,” Auchincloss said in a presentation online. This means BP can proceed with rehabilitating the giant oil fields.
