BP PLC (LSE:BP.) became the latest oil and gas giant to report bumper results with third-quarter underlying replacement cost profits hitting US$8.15bn, down from the record US$8.45bn in quarter two, but way above last year’s US$3.3bn.
A further US$2.5bn share buy-back was announced after BP said it had generated surplus cash flow of US$3.5bn in the quarter, taking buy-backs for the year to US$8.5bn.
More returns are on the cards with BP estimating it can deliver US$4.0bn of buy-backs based on its current forecasts which assume an oil price of US$60 a barrel, way below the current price.
Unlike Shell PLC (LSE:SHEL, NYSE:SHEL), BP said it expects to pay a windfall tax of US$800mln out of around US$2.5bn in taxes for its British North Sea business this year.
In a statement, BP said quarter three was impacted by weaker refining margins, an average oil trading result and lower liquids realisations, partly offset by an “exceptional” gas marketing and trading result and higher gas realisations.
Murray Auchincloss, chief financial officer said: “Third-quarter results show BP continuing to execute its disciplined financial frame.”
“Net debt fell for the tenth successive quarter; we are investing with discipline; and we are delivering on our commitment to shareholder distributions - announcing a further US$2.5bn share buyback.”
BP said it expects oil and gas prices to remain elevated for the rest of the year and forecast industry refining margins would remain strong in the fourth quarter due to sanctioning of Russian crude and product and energy prices are also expected to remain high.
Fourth-quarter 2022 upstream production on a reported basis is expected to be slightly lower compared with the third quarter 2022, primarily in the group’s gas regions, it commented.
Refining margins are set to remain high, the benefits of which will be partially offset by elevated energy prices, a higher level of turnaround activity, and operational impacts following the shutdown of the BP-Husky Toledo refinery in Ohio, US, BP added.