BP’s interim chief executive has downplayed speculation that the oil company could be a takeover target after reporting weaker than expected profits of $3.3bn (£2.7bn) for the third quarter of this year.
The future of BP has been cast in doubt amid a wave of mega-mergers in the US oil industry and after the shock exit of the company’s chief executive, Bernard Looney, in early September.
The lower than expected profits, which tumbled from $8.2bn in the same months last year, mark BP’s first set of financial results since the board appointed BP’s chief financial officer, Murray Auchincloss, to the top job on an interim basis.
Auchincloss told the Guardian he was not concerned about the takeover speculation because BP was “in a pretty good position” and was trading at similar multiples to earnings as the European oil companies Shell and Total. He said BP had also started to close the valuation gap between the company and its US competitors.
BP’s share price has trailed its larger industry rivals since the industry emerged from the Covid-19 pandemic, and BP embarked on a plan to cut its fossil fuel production by the end of the decade and increase spending on low-carbon energy, raising speculation that it could fall prey to a takeover. Its shares declined by more than 4% on Tuesday after its lower than expected financial results, making it the biggest faller on the FTSE 100.
Auchincloss said shareholders at the company’s strategy investor day in the US in early October were “very supportive” of BP’s strategy, which it updated earlier this year to water down its green targets. BP has taken bold steps into the offshore wind industry as part of its green plan but was forced to book a $540m writedown on two projects off the coast of New York because of higher than expected costs.
The interim boss declined to comment on whether he would put himself forward to take on the chief executive role on a permanent basis. “It’s a great responsibility. But to be honest, I’m just focusing on the day job,” he said.
The BP chair, Helge Lund, has started the hunt for a new boss to replace Looney, who stood down after three years at the helm after misleading the board about a number of past personal relationships with BP colleagues. The search could lead to the company’s first external chief executive hire for decades.
Auchincloss said it had been a “solid quarter” for the company because of its “strong underlying operational performance”. He added: “As we laid out at our investor update in Denver, we remain committed to executing our strategy, expect to grow earnings through this decade, and on track to deliver strong returns for our shareholders.”
BP blamed the earnings slump in the last quarter on weaker energy market prices but the profits were also well below analysts’ expectations of just over $4bn for the quarter.
The benchmark oil price averaged $86.75 a barrel in the third quarter, down from $100.84 a barrel in the same period last year, when the war in Ukraine upended global energy markets. Brent crude was trading at just above $88 a barrel on Tuesday.
European gas markets reached record highs after Russia cut off its pipeline exports to the continent. In the UK, the gas price soared to an average of 281p a therm in the third quarter last year before falling to 82p a therm in the same period this year.
BP has come under growing pressure from green groups since the company watered down its climate targets earlier this year at the same time as announcing that annual profits more than doubled to $28bn for 2022.
Analysis by the Institute for Public Policy Research, a left-leaning thinktank, has found that BP invested nine times more into fossil fuels as renewables in the last two years.
Joseph Evans, a researcher at IPPR, said: “BP is prioritising profit before people and the planet. At a time when energy companies should be urgently responding to climate change by moving their investments away from fossil fuels, BP has doubled down on its oil and gas business to reap enormous profits and enrich their shareholders with more than $1bn in buybacks.”
Charlie Kronick, the senior climate adviser at Greenpeace UK, said: “With massive storms pummelling both sides of the Atlantic, BP continues to post billions in profit while ordinary people pick up the tab for climate change.”
