BP shares take a hit on profit miss even after fresh $1.5 billion payday for investors

 BP has unveiled plans for another multi-billion pound payday for shareholders alongside quarterly profits of £2.7 billion, earnings which came in shy of City expectations. 

Shares in the UK’s fourth most valuable company were the biggest fallers on the FTSE 100, despite the $1.5 billion capital return. The stock was down 22p to 505p, a drop of over 4%. 

The payout stoked more public controversy and it came with the oil and gas giant looking for a full-time chief executive after the sudden departure of Bernard Looney. He resigned in September for failing to fully reveal relationships with colleagues. 

Jonathan Noronha-Gant, at anti fossil fuel campaign group Global Witness, said: “The government is allowing BP to make off with the heist of the century … BP is still riding the wave of the energy crisis, shovelling cash to its shareholders while the UK’s poverty rates spiral.”

BP also said based on its $60 per barrel oil price forecast, it expected to deliver share buybacks of around $4.0 billion per annum” while upping regular dividends by 4%. Brent crude is currently trading around $87.  But the headline earnings – of $3.3 billion dollars for the third quarter – were under forecasts of  $4 billion and down sharply year-on-year, from the $8.2 billion in the same part of 2022. 

That was when wholesale energy prices were around their peak levels, sent soaring by Vladimir Putin’s invasion of Ukraine, stoking the cost-of-living crisis and a public outcry over accusations of profiteering from energy firms. That led to a windfall tax on the sector, in part to fund price caps on household energy bills. 

Alongside today’s results, interim CFO Kate Thomson said the company "delivered robust operating cash flow". 

In the City, attention focused on the miss to headline earnings rather than the investor payout.

 Michael Hewson, chief market analyst at CMC, said: “Uncertainty at the top of the UK’s second biggest oil company may help to explain why BP’s share price has underperformed relative to Shell in the last 3 months, however it doesn’t explain why it has underperformed year to date.”

He added: “It rather begs the question as to whether any new CEO will persevere with the ‘Performing while Transforming’ [strategy] of Bernard Looney, because while it is clear that BP is transforming, it certainly isn’t performing.”

The third quarter miss looked to come from the gas and low-carbon energy division, where profit fell to $1.3 billion from $2.2 billion in the second quarter and $6.2 billion a year ago. There was a $540 million write down on the value of a US wind farm off the shores of New York.