BP PLC's (LSE:BP.) third-quarter results got the thumbs up from analysts at UBS, after the oil giant reported net income of $8.2bn, 33% above the market consensus of $6.1bn and ahead of the bank’s own forecast of $5.8bn.
EBIT of $13.8bn was 30% above consensus of $10.6bn primarily driven by gas trading while the tax charge at 36.8% was in line with consensus 37.0%, the UBS analysts noted.
They explained that the beat was primarily driven by gas and low carbon energy where EBIT of $6.2bn was double City forecasts thanks to exceptional gas marketing and trading results.
Reported cash flow from operations (CFFO) of $8.3bn was lower than expected but this was driven by large working capital of $6.2bn. Excluding this and CFFO was $14.5bn above UBS’s forecast of $9.2bn, the Swiss bank's analysts said.
The analysts explained that these reduced cash flows fed through to a lower-than-expected share buy-back of $2.5bn (consensus $3bn).
Capex was slightly below forecast at $3.2bn while net debt of $22.0bn was above the UBS estimate of $18.9bn.
The analysts noted that BP now expects 2022 production to be higher on an underlying basis, rather than slightly higher primarily driven by the better performance in quarter three, as upstream production is expected to be lower in the final quarter of the year.
Capex guidance for 2022 was raised to $15.5bn from the upper end of the $14-15bn range, if the Archaea transaction closes this year. BP said.
The UBS analysts reiterated a 'buy' rating on BP with a 510p price target. Shares rose 0.9% to 484p.