3Q results summary
BP announced underlying profits of $4.7 billion for the third quarter of 2009, an increase of 60% over the second quarter, and well above market estimates
Group chief executive Tony Hayward said the results reflected another quarter of very good progress, and that strong operational and cost performance had helped offset a tough external environment including weak gas prices and refining margins.
"These results demonstrate real operational momentum across the company. We continue to transform our cost base and grow upstream production volumes,” he said. "They show that even in the tough conditions that prevail in many of our markets, we can continue to deliver on our promise to invest in future growth while meeting our commitments to shareholders today."
Production in Exploration & Production was 7% higher than a year ago and unit production costs were down 18%. BP's earnings benefited from a greater percentage of higher-margin barrels, in particular from the Gulf of Mexico, as well as good performance from TNK-BP.
The upstream growth strategy has been bolstered by a number of major announcements made in the last few months, including the giant Tiber find in the Gulf of Mexico and new access with the super-giant Rumaila field in Iraq.
Refining & Marketing reported underlying profits of $1.1 billion, a decrease of $250 million compared with a year ago, but $100 million higher than the second quarter - a strong performance in a materially weaker refining environment. This strong underlying performance reflects good progress on both operations and costs. Refining availability was over 94%, compared with 88% in 3Q 2008.
Greater efficiency is being driven across BP. So far this year cash costs are down by more than $3 billion compared with the same period last year, and 2009 cash costs are now expected to decrease by around $4 billion, twice the level projected at the start of the year.
Hayward also reiterated the importance of cost effectiveness and efficiency in the way BP operates and uses capital: "At the beginning of this year, we talked about balancing our sources and use of cash in an oil price environment of around $60 per barrel."
Good progress has been made in achieving this goal, as evidenced by a positive net cashflow for both the quarter and over the past six months, in spite of the much weaker than expected trading environment.
"While we should feel good about how far we have come in the last two years, there is more to do," Hayward cautioned. “Our underlying replacement cost profit for the quarter is still down 47% compared with 2008, largely due to the fact that average hydrocarbon prices are around 50% lower than last year.
"The focus on continuous improvement must be part of everything we do – making sure that tomorrow's performance is better than today's.
