Results round-up

Underlying third-quarter profits halved at BP compared to last year but the fall was not as bad as feared as the oil colossus continues to chip away at costs.

Although down 49% on last year due to lower oil prices, currency effects and one-off events hitting production levels, underlying replacement cost profits of $933m in the three months to the end of September were well ahead of the consensus forecast of $720m.

Cost-cutting helped, with cash costs over the past four quarters down $6.1bn compared to two years ago.

"We continue to make good progress in adapting to the challenging price and margin environment," said chief financial officer Brian Gilvary. "We remain on track to rebalance organic cash flows next year at $50 to $55 a barrel, underpinned by continued strong operating reliability and momentum in resetting costs and capital spending.

The Brent oil price averaged $46 a barrel in the quarter, compared with $50 a barrel in 3Q 2015, and gas prices outside the US were also weaker. Refining margins were steeply down from a year earlier, depressed by high product stock levels.

Reported profits were up $1.66bn from $1.23bn a year ago and the FTSE 100 company announced an unchaged quarterly dividend of 10 cents per share, which will be paid on 16 December with the sterling translation to be calculated by 6 December.

Total production for the quarter was 5.9% lower and underlying production fell 2% to 2,110m barrels of oil equivalent per day, with the main factors being maintenance activities, the impact of weather and the outage from the Pascagoula gas plant fire in the Gulf of Mexico.

For the first nine months of the year, total and underlying production of 2,209mboe/d was broadly flat versus the same period in 2015.

Looking to the final quarter of the year, BP said it expected production to be slightly higher than the third quarter, mainly reflecting recovery from planned seasonal turnaround and maintenance activity.

Royal Dutch Shell’s third quarter results improved from the second and beat forecasts, however the oil giant remains uncertain about the oil price outlook.

Earnings, excluding exceptional items, rose 18% to $2.8bn compared to the same quarter last year, above the forecast consensus of $1.7bn.

This was due to increased production volumes mainly from February's acquisition of BG Group, lower operating expenses, and lower well write-offs, which was partly offset by the decline in oil, gas and liquefied natural gas prices.

Chief executive Ben van Beurden said that the company had delivered better results for the third quarter, reflecting operational and cost performance, but lower oil prices continued to be a challenge across the business, and the outlook remains uncertain.

Currently oil prices are below the $50 mark, with Brent crude at $48.93 a barrel and West Texas Intermediate around $46.94.

The company's current cost of supplies (CCS) earnings attributable to shareholders was $1.4bn compared with a loss of $6.1bn for the same quarter last year.

Cash flow from operating activities was $8.5bn, which included favourable working capital movements of $700m.

Gearing at the end of the third quarter climbed to 29.2%, compared to 12.7% last year, due to the BG acquisition.

Van Beurden said Shell's investment plans and portfolio are focused on reshaping the company "into a world-class investment case at all points in the oil-price cycle", through stronger returns and improved free cash flow per share, which the company is “making good progress towards”.

He said that the integration of BG “is now essentially done” and that it has been an “important catalyst for the significant and lasting changes” to the company.

Cost cutting led to underlying operational costs in 2016 running are at an annualised rate of $40bn, $9bn lower than Shell and BG costs in 2014, and are set to reduce further on a like-for-like basis.

Capital investment, including $3bn in non-cash items, is to be around $29bn, about $18bn below 2014 Shell and BG levels., while investment for 2017 is expected to be around $25bn.

The company is to reduce its debts by selling $30bn of assets by the end of 2018 from 16 material asset sales currently being worked on.

Projects started up in during the year are expected to add more than 250 thousand barrels of oil equivalent per day, while cash flow from the new projects started between 2014 and 2018 is expected to come to $10bn in 2018, at an average $60 oil price.

The company declared a third quarter dividend of $0.47 per share and $0.94 per American depositary share.