BP report unexpected profit despite 50% drop
BP report unexpected profit despite 50% drop
Tuesday 27th October 2009
BP has reported profits for the third quarter which were well ahead of predictions, despite being down 50 per cent year on year.Share prices were up five per cent for the oil giant, as its replacement cost profit was $4.98 billion (£3 billion) between July and September.
Oil prices are now rising steadily, but like profits are well off the record highs seen last year. Forecasters had predicted BP's profits today to stand at $3.2 billion (£1.95 billion), far below the $4.67 billion (£2.85 billion) actually recorded.
Rob Morgan, investment analyst at Hargreaves Lansdown, today wrote: "After reaching a peak of approximately $145 per barrel in July 2008, the oil price fell sharply to a low of around $34 in December 2008, roughly a quarter of the peak price. It has since more than doubled from the low point to around $80 per barrel today.
"As well as the weak dollar, the recent rise in the oil price has so far been driven by the anticipation of economic recovery (from news such as company earnings upgrades and economic growth figures) rather than actual changes to supply and demand."
Cost cuts were largely the source of the unexpected third quarter profits, with BP saying unit production costs in the quarter were 18 per cent lower than the third quarter of 2008.
Staff have also been reduced, with 5,000 posts due to have been lost this year.
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