The ongoing U.S – China trade tensions have had an impact on global oil demand. Owing to the reduced oil prices, London based multinational oil and gas company, British Petroleum (BP), has posted a significant drop in Q3 profits for 2019. It’s the first time that BP has printed a net quarterly loss in over three years.
A one-off charge ($2.6 billion) that was associated with asset sales had previously made the analysts downgrade their expectations for BP’s profits in the third quarter. Thanks to the strong refining operations, however, the profit report has beaten the estimate despite a sharp decline.
BP’s Chief Executive To Step Down In 2020
Following the report, Bob Dudley, Chief Executive of BP, was reported stating that underlying cash flow and earnings for the British oil company have sufficiently held the ground. Dudley is set to step down in 2020 after serving the company for almost a decade.
Cash flow for the company ($6.1 billion) matches the figure for Q3 of 2018, despite a remarkable decline of 17% in oil prices.
The one-off charge of $2.6 billion led to a net loss of $700 million for BP. Earlier in October, BP had announced that a non-cash charge of $2-$3 billion can be expected in the third quarter. It was further added that there are plans of disposing of $10 billion worth of assets by the end of the year. BP’s divestments in 2019 are so far valued at $1.4 billion.
BP had invested $10.25 billion last year to purchase shale assets of BHP U.S, that earned it a reputation as one of the world’s largest drillers for shale oil. Earlier this year, Hilcorp Energy has also purchased BP’s Alaskan Business for $5.6 billion.
BP Posted A 40% Decline In Net Income
The Q3 earnings report has further highlighted that the net income for BP has declined to $2.3 billion (40%) as compared to Q3 of 2018. Net income for the oil company was reported at $2.81 billion for the second quarter, while analysts had previously estimated a net income of $1.73 billion for the company in the third quarter, according to the company-provided survey.
BP’s stock opened at 513 GBX on Tuesday. Trading mostly below the opening level, it has printed a daily low of 491.19 so far, and is currently trading around 497.05.