BP report $3.3bn profit for Q3

Oil and gas giant BP has reported $3.3bn profit in Q3, exceeding analysts' predictions of $3.1bn.

The huge boost in profit, which is around 38 times higher one year ago, can be put down to a surge in the price of oil and gas in the wake of global economic recovery.

Natural gas has climbed especially high as a cold winter in Europe depleted reserves. This was then exacerbated by increased demand in Asia as emerging countries geared up after a covid induced hibernation, further reducing global deposits.

The rising cost of energy has already started to have implications in the UK. 15 energy companies have gone under since the price began to skyrocket in September as they were unable to pass the cost to consumers due to the energy price cap. The cap was increased by 12% in October and is predicted to be increased by as much as 30% when it is reviewed again in March.

"This has been another good quarter for BP - our businesses are generating strong underlying earnings and cash flow while maintaining their focus on safe and reliable operations," BP chief executive Bernard Looney said.

Looney is currently in attendance at the Cop26 Global summit in Glasgow where world leaders and industry figures are meeting to discuss climate change. Despite their profits being directly linked to gas and oil they are in the process of selling off parts of their business in order to become less reliant on fossil fuels by 2030.

BP’s strengthened financial position resulted in a $1.25bn share-buyback programme. This is expected to be completed before the company's annual finance report is released for 2021. While the move will no doubt be welcomed by shareholders, some analysts questioned whether this kind of generosity was warranted in such volatile times.

“Generosity in good times is all well and good, but that shouldn’t come at the expense of long-term financial stability, particularly given the considerable spending on renewable and low-carbon projects that’s likely over the coming years,” said Nicholas Hyett, equity analyst at Hargreaves Lansdown in London.

“High prices have driven strong year-on-year growth in profits, and that’s being used to fund a generous $1.25bn share buyback. Coming on top of a $1.4bn buyback announced at the half year stage the group is firmly focused on shareholder returns at present. However, you can reasonably question whether that generosity is justified,” Hyett added.

BP have warned that they expect gas supply “will remain tight during the period of peak winter demand” while the price of oil will remain fairly constant as we head into the end of the year.