BP's 3Q Profit Beat Market Expectations -- Earnings Review
By Jaime Llinares Taboada
BP PLC reported results for the third quarter on Tuesday. Here's
what you need to know:
UNDERLYING REPLACEMENT COST PROFIT: BP reported an underlying
replacement cost profit of $86 million, beating a consensus
estimate of a $120 million loss, compiled by the company and based
on 25 analysts' forecasts. The result narrowed heavily from a year
earlier, when the oil-and-gas company posted a $2.25 billion
underlying RC profit.
OPERATING CASH FLOW: Cash flow from operations was $5.20
billion, beating a market consensus of $3.53 billion, taken from
FactSet and based on nine analysts' estimates. It came in below the
$6.06 billion reported a year prior, but improved from the $3.74
billion posted in the second quarter of 2020.
WHAT WE WATCHED:
--LOW-CARBON BUSINESS: BP didn't provide a meaningful update on
its low carbon energy transition strategy. CEO Bernard Looney said
that the company is "performing while transforming," and
highlighted the completion of oil-and-gas projects in the U.S. and
--DEBT: Net debt was reduced by $0.4 billion to $40.4 billion as
at Sept. 30, and BP expects this to fall further in the fourth
quarter as proceeds from sales are received. The FTSE 100 group has
set targets to bring net debt below $35 billion. BP also aims to
secure $25 billion via divestments by 2025.
--NEAR-TERM OUTLOOK: The company offered some hope on
hydrocarbon markets, saying the gradual recovery in oil demand is
set to continue. In addition, OPEC+ production cuts are stabilizing
the crude market, and declining U.S. gas supply should support
prices in Europe and Asia. However, the refining margin outlook is
challenging, as inventories remain high and the pandemic continues
to hurt demand for gasoline and jet fuel.
Write to Jaime Llinares Taboada at email@example.com;
(END) Dow Jones Newswires
October 27, 2020 06:19 ET (10:19 GMT)
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