28th Oct 2014 07:54
LONDON (Alliance News) - BP PLC Tuesday reported a drop in third-quarter earnings from its upstream segment due to lower oil prices, but saw an increase in downstream earnings, as it hit its cash flow targets and said it is on track to hit its 2014 targets.
During the quarter ended September 30, BP's upstream segment reported an underlying pretax replacement cost profit of USD3.9 billion, compared with USD4.4 billion in the same period in 2013. This result reflected the negative impact of lower oil prices, partly offset by higher gas prices and increased production from key higher-margin regions, the oil major said in a statement.
The downstream segment reported underlying pre-tax replacement cost profit for the quarter of USD1.5 billion, compared with USD700 million a year earlier. The improvement was driven by a stronger refining environment as well as an increased contribution from supply and trading activities, it added.
Operating cash flow for the quarter totalled USD9.4 billion compared with USD6.3 billion a year earlier. For the first nine months of 2014, total operating cash flow reached USD25.2 billion.
"BP's operational momentum continues to deliver results," said Chief Executive Bob Dudley. "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."
As a result of hitting the cash flow targets, BP announced a quarterly dividend of 10.00 cents per ordinary share, a 5.3% year-on-year increase which is expected to be paid in December, it said in a statement.
BP also revised down its organic capital expenditure target for the full year to USD23 billion, compared to its original guidance of between USD24 billion and USD25 billion. BP's net debt was equivalent to a gearing level of 15%, within the company's target of between 10% to 20%, it said.
"We are maintaining our strong financial framework, with both a conservative level of gearing and a strictly disciplined approach to investment," said Chief Financial Officer Brian Gilvary. "This provides resilience through periods of oil market volatility."
BP's underlying net income from Russia's Rosneft for the quarter ended September 30, saw a significant decrease to USD110 million, compared to USD808 million during the third quarter of 2013. The decrease was due to the depreciation of the rouble against the dollar during the period, together with lower oil prices, said BP.
The company reported average production of 3.1 million barrels of oil equivalent per day during the third quarter ended September 30. Excluding production from Russia, underlying gas and oil production grew by 4.1% compared with a year earlier. Reported production excluding Russia was 2.1 million barrels of oil equivalent per day, 2.7% lower than the third quarter of 2013 due to the expiry of an Abu Dhabi concession in January, said BP.
By Joshua Warner; [email protected]; @JoshAlliance
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