BP shares fell on Tuesday after the oil major halted share buybacks amid falling profits and weaker performance across most business units.
BP reported a fourth-quarter underlying replacement cost profit of $1.5 billion, down from $2.2 billion in the previous quarter, as lower upstream realizations and reduced refinery throughput weighed on performance.
The company posted a reported loss of $3.4 billion for the quarter, compared with a profit of $1.2 billion in Q3, after accounting for inventory holding losses and net impairments of around $4 billion related to its gas and clean energy transition businesses, as the group front-loaded its retreat from lower emissions business accelerated.
Across BP’s operating segments, gas & low carbon energy delivered an underlying profit before interest and tax of $1.4 billion, down from $1.5 billion in the third quarter, reflecting lower realisations and an average gas marketing and trading result.
Oil production & operations saw underlying profit before interest and tax fall to $2.0 billion from $2.3 billion, impacted by lower realizations, production mix effects, and reduced income from equity-accounted entities, though this was partly offset by lower exploration write-offs.
Customers & products segment posted underlying profit before interest and tax of $1.3 billion, down from $1.7 billion, as weaker midstream performance, including a temporary outage at the Whiting facility, offset stronger refining margins.
“BP’s fourth-quarter results showed relative resilience in a weak pricing environment. Net debt is down again after a spike in the third quarter, but on a 12-month view, it’s not budged much,” said Derren Nathan, head of equity research, Hargreaves Lansdown.
“Management is taking some decisive action to fix the balance sheet, scrapping the buyback, doubling down on non-core disposals and upping structural cost-savings targets to $5.5-6.5bn by the end of next year.
“In an effort to clear the decks ahead of the arrival of new CEO Meg O’Neill on 1st April, BP’s also written down its underperforming solar and renewable natural gas businesses by around $4bn. This leaner meaner approach could pave the way for more sustainable payouts to shareholders further down the line, but with investment spend coming down, investors will want some assurance on BP’s plans to remain an energy leader over the long-term.”