An accounting shift adversely impacted BP third quarter accounts. However, the company underlying earnings soared due to higher oil and gas prices.
BP reported a third-quarter net loss of $2.5 billion on Tuesday, despite soaring oil and gas prices. It was due to an unfavorable accounting effect of $6.1 billion before tax.
Excluding accounting effects, the underlying profit of the British group rose to 3.3 billion dollars, compared to 86 million a year earlier. BP has reported a net profit of $ 5.2 billion in Q3. In contrast, the group posted a massive loss of $21.6 billion in 2020.
“Higher prices for future gas contracts” are to blame for the charge that plagues the group’s results,”. “They force the accounting entry of the risk before the deliveries are made”. However, “this problem should disappear once prices fall and deliveries finalized,” the company stated.
BP reported a net loss of $450 million in the third quarter of 2020.
According to the company’s CEO, Bernard Looney, the underlying performance was driven in part by “commodity prices”. Meanwhile, strong recovery in hydrocarbon prices and in particular by an impressive surge in natural gas prices boosted it further.
“BP’s statement indicates that these solid results and underlying cash flows are supporting the group’s ongoing reduction of net debt,”. which has decreased by 20% in just one year, to $32 billion”.
Share buyback program.
The oil major also announced $1.25 billion in share repurchases, up from $900 million in the third quarter, and announced a dividend of 5.46 cents per common share for the third quarter, stable after a 4% increase in the previous quarter.
BP’s results follow those of American oil giants ExxonMobil and Chevron, which have reaped the benefits of the recovery in oil prices, earning billions of dollars in profits.
Shell also suffered an accounting charge, publishing a loss of 447 million dollars in the third quarter.