LONDON (AFP) – BP profits slumped in the third quarter on sliding oil prices and a drop in the ruble linked to Western sanctions against Russia, the British energy group said on Tuesday.
BP, which owns almost 20 per cent of Russian oil major Rosneft, said that “depreciation of the ruble against the dollar over the period had a significant impact on” performance in Russia.
Oil prices have fallen sharply since the middle of June owing to a global supply glut, which prompted US bank Goldman Sachs to say on Monday that it had slashed its price forecasts for the next two years..
BP chief executive Bob Dudley however said in Tuesday’s results statement that despite “lower oil prices” and a plunge to quarterly profits, the oil major was “well on track” to hit its full-year targets.
Group net profit tumbled 63 per cent to $1.29 billion (1.0 billion euros) in the three months to the end of September, compared with the outcome for the equivalent period in 2013, BP said in an earnings statement.
Profit adjusted to reflect the value change in oil inventories retreated to $2.39 billion from $3.18 billion in the reporting period. Production fell 2.7 per cent to 2.14 million barrels of oil equivalent, partly because of maintenance projects.
During the third quarter, BP learned that it potentially faces billions of dollars in new fines after a New Orleans judge concluded it had acted with “gross negligence” ahead of the massive 2010 Gulf of Mexico oil spill. BP reiterated in Tuesday’s statement that it intends to appeal the ruling.
“The strength of sterling, the weakness of the oil price, the sanctions on Russia, coupled with the sharp drop of the ruble, and the ongoing uncertainty as to a final figure on the Gulf of Mexico settlement have all weighed on the company and may well have crushed a lesser force,” said Richard Hunter, head of equities at Hargreaves Lansdown Stockbrokers.
“BP’s response has been to generate strong cashflow, enabling an increase to the dividend and a continuation of the buyback programme, a reduction in capital expenditure and an improved downstream performance, driven by an improved refining environment,” Hunter added in a note to clients.
BP’s share price gained 0.40 per cent to stand at 431.95 pence in morning deals on London’s benchmark FTSE 100 index, which was up 0.38 per cent at 6,387.73 points.