Dow Jones Newswires: BP swings to loss on weaker upstream earnings

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BP PLC said Tuesday that it swung to a loss in third-quarter earnings as it reported a divestment-related charge as well as lower upstream earnings.

The London-based energy giant BP, -0.28% BP, -0.59%  posted a replacement-cost loss–a metric similar to the net income figure that U.S. oil companies report–of $351 million for the three months ended Sept. 30, compared with a profit of $3.09 billion in the year-earlier period.

Stripping out one-off items, BP’s underlying replacement-cost profit–the company’s preferred metric–came in at $2.25 billion, compared with $3.84 billion in the same period last year. A company-compiled consensus of 24 brokers’ estimates had forecast third-quarter underlying replacement-cost profit at $1.73 billion.

BP attributes the fall partly to weaker oil prices, with Brent crude at $62 a barrel in the quarter, compared with $75 bbl in the year-earlier period. Production was also hit by maintenance activities in some of the company’s highest-margin regions, as well as Hurricane Barry in the Gulf of Mexico, which shut down facilities for about 14 days, BP said.

The company also reported a non-cash, non-operating after-tax charge of $2.6 billion related to divestments.

Total revenue for the third quarter was $62.29 billion, compared with $80.80 billion the previous year, BP said. The company reported a net loss of $749 million.

Upstream production for the quarter, excluding Rosneft Oil Co. (ROSN.MZ), rose 4.4% to 2.57 million barrels of oil equivalent a day. Underlying replacement-cost profit before interest and tax in the upstream business–which produces oil and gas–fell to $2.14 billion from $4 billion last year.

Looking ahead, BP said it expects fourth-quarter production to be higher thanks to the completion of seasonal maintenance and turnaround activities.

Operating cash flow, excluding payments related to the 2010 Deepwater Horizon oil spill, was $6.5 billion, while net debt rose to $46.5 billion, BP said. The company paid roughly $400 million in connection to the oil spill in the Gulf of Mexico as part of a $20 billion settlement with the U.S. government in 2015.

BP declared a quarterly dividend at 10.25 cents a share.

The company said divestment transactions announced in 2019 totaled $7.2 billion at the end of the quarter, adding it expects to reach around $10 billion by the end of the year.

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