Oil prices hit BP profits

BP sees Q3 profits drop by a better-than-expected 40 per cent due to low prices and bad weather

Profits at BP dropped by 40 per cent last quarter, but they still came in higher than expectations due to strong figures from its refining operations. Profits fell to $2.3 billion (£1.9bn, €2.0bn) in the third quarter compared with $3.8bn (£3.0bn, €3.4bn) in the same period last year.

The firm blamed a low oil price and bad weather.

“The result was impacted by significantly lower upstream earnings, resulting from lower prices, maintenance and weather impacts,” BP said in its statement.The oil price has slumped to an average of $62 a barrel in the last quarter, from more than $75 a barrel a year ago.

During the past three months, BP has seen progress on its $10bn (£7.8bn, €9.0bn) programme to sell off assets including a $7.2bn (£5.6bn €6.5bn) deal for Hilcorp to take over all its oil fields and operations in Alaska.

However, that sale meant BP was forced to write off $2.6bn (£2.0bn, €2.3bn) because of tax charges which resulted in $749m (£584m, €676m) loss for the quarter.

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BP cited the impact of Hurricane Barry in the Gulf of Mexico in July, which led to oil fields being shut down and oil and gas production dropping by 2.5 per cent. Output is expected to increase in the fourth quarter.

BP shares were trading 3.0 per cent lower by mid-morning.

Separately, British oilfield services firm Hunting Plc warned today its annual core profit would be at the lower end of market expectations. It blamed a slowdown in the US onshore drilling market. It expects a slowing in drilling across North America in Q4, which will further impact the results for the second half of the year. Shares were trading 5.0 per cent lower by mid-morning.

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