• 5 minutes China Faces Economic Collapse
  • 8 minutes ZeroHedge: Oil And Gas Bankruptcies To Accelerate As $137 Billion Debt Matures Over Next Two Years
  • 11 minutes Trump Will Win In 2020
  • 14 minutes Oil Production Growth In U.S. Grinds To A Halt
  • 1 hour Drone attacks cause fire at two Saudi Aramco facilities, blaze now under control
  • 43 mins Never Bring A Rapier To A Gun Fight
  • 10 hours The Belt & Road Initiative: A Wolf in Sheep's Clothing?
  • 2 hours Ethanol, the Perfect Home Remedy for A Saudi Oil Fever
  • 4 hours One of the fire satellite pictures showed what look like the fire hit outside the main oil complex. Like it hit storage or pipeline facility. Not big deal.
  • 7 hours USAvChina.com
  • 12 hours Aramco Production
  • 1 hour Democrats and Gun Views
  • 2 hours Lest We Forget... A Brief Timeline of China's Modern History
  • 14 hours Trump vs. Xi Trade Battle, Running Commentary from Conservative Tree House
  • 2 hours Iran in the world market
  • 2 hours Visualizing US Oil & Gas Production (Through May 2019)
  • 12 hours Oil Slide Worries Traders. *relax* This Should Get Sorted by Year End.
Big Oil Is Down, But Not Out

Big Oil Is Down, But Not Out

Activist divestment and climate change…

Despite Lower Profits, BP Increases Dividend

The global drop in oil prices over the summer led to a steep drop in BP’s third-quarter profits, but that hasn’t stopped the British energy giant from raising its dividend.

BP’s revenues from July through September fell from $96.6 billion in 2013 to $93.9 billion in 2014. In the same period this year, the price of Brent crude was $102 a barrel on average, compared with almost $110 a barrel in the second quarter of this year, and more than $110 in the third quarter of 2013.

At the same time, BP’s underlying replacement profit declined to $3 billion during the third quarter of 2014. That profit, a key gauge of the performance of large oil companies, excludes non-operating items and fluctuations in accounting. During the third quarter of 2013, the underlying replacement profit was $3.7 billion, and in the second quarter of 2014 it was $3.6 billion.

Related: The End of the Crisis for Now: America Is Awash in Energy

In the month since the quarter ended, oil prices have declined further – on Oct. 27 Brent crude closed at $85.83 a barrel and U.S. crude fell to $79.44 – indicating an even greater drop in profits for large oil companies in this year’s final quarter.

Those values weren’t helped by Goldman Sachs’s decision on Oct. 26 to reduce its oil price forecasts, including West Texas Intermediate and Brent, crude oil’s world benchmark. The New York-based investment bank attributed the lower forecast on a combination of booming production and weak demand during a period of weak economic growth worldwide.

Goldman previously had estimated a price of $100 per barrel for Brent during the first quarter of 2015, but has now lowered that forecast to $85 per barrel.

Despite all this unfavorable news, BP said its own financial strength and vigorous cash flow warranted the raising of its dividend by 5.3 percent to 10 cents a share. For example, profit at the company’s downstream operations – refining and processing oil and gas – more than doubled from $700 million to $1.5 billion.

BP CEO Bob Dudley explained, “Growing underlying production of oil and gas and a good downstream performance generated strong cash flow in the third quarter, despite lower oil prices. This keeps us well on track to hit our targets for 2014.”

Related: UK Wants U.S. Supreme Court To Limit BP Liability For Deepwater Horizon

Meantime, group profits also were constrained because of a plunge in net income at Russia’s government-run oil giant Rosneft, in which BP owns a stake of nearly 20 percent. Income at Rosneft has fallen from $808 million from $110 million during the most recent quarter because of the fall in the value of the ruble compared with the U.S. dollar.

There’s been concern about the value of BP’s share in Rosneft because of EU and U.S. sanctions imposed on Russia, particularly its oil companies, in the continuing international dispute over Ukraine. But BP said that it has felt no negative impact from the sanctions.

Still, BP will be tightening its belt somewhat, spending a total of about $23 billion on capital projects for all of 2014, about $2 billion less than originally planned.

By Andy Tully of Oilprice.com

More Top Reads From Oilprice.com:



Join the discussion | Back to homepage

Leave a comment

Leave a comment

Oilprice - The No. 1 Source for Oil & Energy News
Download on the App Store Get it on Google Play