Energy giant BP has failed to meet earnings forecasts for the third quarter, despite the recent rebound in oil prices. Analysts had predicted an underlying replacement cost profit of $4 billion, but BP reported $3.3 billion instead. This news caused BP shares to initially drop by 5%, before recovering slightly to trade down 3.9% at 10.30am.
The lower-than-expected performance was attributed to a weak performance by BP's gas marketing and trading arm, as well as a $540 million pre-tax impairment charge taken on three wind farms off the northeastern US coast. Additionally, profits were 60% lower than the same period last year, a result of soaring oil and gas prices last year following the easing of Covid restrictions and Russia's invasion of Ukraine.
Although BP left its dividend unchanged, it announced a share buyback of £1.2 million, as it believes its own stock to be undervalued. The company's interim chief executive, Murray Auchinloss, stated that this quarter demonstrated strong operational performance.
However, questions remain concerning the recent resignation of former CEO Bernard Looney, particularly regarding any potential changes to the company's current strategy. BP shares have risen 5.5% over the past year, trading up 160% from their pandemic low.
Despite BP's commitment to improving its environmental credentials, recent rollbacks on its ambitious targets have angered climate campaigners. BP aims to cut carbon emissions from its upstream oil and gas operations by 20 to 30% by the end of the decade, down from a previous target of 35 to 40%.
Critics, such as Joseph Evans from The Institute for Public Policy Research, accuse BP of prioritizing profit over the planet, as the company focuses on its oil and gas business and announces billion-dollar buybacks. Overall, uncertainty remains until a permanent replacement for the CEO position is found.