BP profit hits 18-year high as oil refining margins surge

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Photo by Oli SCARFF / AFP via Getty ImagesBP PLC said profit surged to the highest in 18 years as soaring refining margins boosted earnings, speeding up the energy giant’s efforts to fix its balance sheet and pay down debt.THIS CONTENT IS RESERVED FOR SUBSCRIBERS ONLYSubscribe now to read the latest news in your city and across Canada.Exclusive articles from Barbara Shecter, Joe O'Connor, Gabriel Friedman, and others.Daily content from Financial Times, the world's leading global business publication.Unlimited online access to read articles from Financial Post, National Post and 15 news sites across Canada with one account.National Post ePaper, an electronic replica of the print edition to view on any device, share and comment on.Daily puzzles, including the New York Times Crossword.SUBSCRIBE TO UNLOCK MORE ARTICLESSubscribe now to read the latest news in your city and across Canada.Exclusive articles from Barbara Shecter, Joe O'Connor, Gabriel Friedman and others.Daily content from Financial Times, the world's leading global business publication.Unlimited online access to read articles from Financial Post, National Post and 15 news sites across Canada with one account.National Post ePaper, an electronic replica of the print edition to view on any device, share and comment on.Daily puzzles, including the New York Times Crossword.REGISTER / SIGN IN TO UNLOCK MORE ARTICLESCreate an account or sign in to continue with your reading experience.Access articles from across Canada with one account.Share your thoughts and join the conversation in the comments.Enjoy additional articles per month.Get email updates from your favourite authors.THIS ARTICLE IS FREE TO READ REGISTER TO UNLOCK.Create an account or sign in to continue with your reading experience.Access articles from across Canada with one accountShare your thoughts and join the conversation in the commentsEnjoy additional articles per monthGet email updates from your favourite authorsSign In or Create an AccountAdjusted net income was US$8.46 billion, up from US$2.21 billion a year earlier, the London-based major said in a statement on Friday. More than half the profit came from the unit that includes oil refining and trading.This advertisement has not loaded yet, but your article continues below.The results are chief executive Meg O’Neill’s second full quarter at the helm and offer a fresh look at the operational performance that she’s identified as a priority. BP’s first outsider CEO is cutting costs, selling assets and paying down debt while preparing to lay out her longer-term strategy for the firm in December.Breaking business news, incisive views, must-reads and market signals. Weekdays by 9 a.m.By signing up you consent to receive the above newsletter from Postmedia Network Inc.A welcome email is on its way. If you don't see it, please check your junk folder.The next issue of Posthaste will soon be in your inbox.We encountered an issue signing you up. Please try again“It really was a banner quarter for the refining business,” she said in an interview with Bloomberg TV. “We had very strong margins from the BP-operated refineries, we also had very strong underlying performance. We were able to capture the opportunity provided by the market.”Net debt tumbled to US$13.87 billion from US$22.3 billion just three months earlier, surpassing the company’s target a year ahead of schedule.BP shares rose as much as 1.8 per cent, and were up about 0.7 per cent at 629 pence (US$8.43) a share at 10:21 a.m. in London.The rapid improvement in BP’s balance sheet gives O’Neill more room to consider shareholder returns after the company suspended buybacks earlier this year.Still, for now BP is focused on balance sheet repair and paying down its remaining liabilities from the deadly Deepwater Horizon disaster earlier than expected and “in full.” The company owes a total of about US$6.8 billion by 2033 for the incident, spread across annual payments.This advertisement has not loaded yet, but your article continues below.“We will use the cash flow we’re generating this year to address all of the remaining liabilities,” chief financial officer Kate Thomson told journalists on a call Friday.BuybacksOn Thursday, rival Shell PLC announced it was increasing its quarterly share buyback to US$5 billion from US$3 billion after its refining margins surged and earnings climbed to their highest since the aftermath of Russia’s full-scale invasion of Ukraine. TotalEnergies SE has pledged as much as US$2.5 billion of repurchases this quarter, while Repsol SA and Eni SpA have also boosted their buybacks.O’Neill said that’s still not the priority for the time being and BP made no mention of share repurchases on Friday.“It’s very easy to get caught up in high prices and think that’s an opportunity to distribute cash,” she said, adding BP still has “more debt and more leverage than we really can afford in a low-price scenario.”O’Neill noted BP’s total financial obligations amount to about US$44 billion, including conventional debt, hybrid bonds, leases and payments for the Deepwater disaster.This advertisement has not loaded yet.This advertisement has not loaded yet, but your article continues below.Refining BonanzaThe profit surge comes amid a refining boom that’s showering Europe’s oil giants with cash, spurring BP’s rivals to announce jumbo payouts to investors.Wars involving Iran and Russia have knocked out or disrupted oil refineries and trade routes, squeezing the world’s capacity to turn crude into diesel, gasoline and jet fuel. That’s driving up prices for consumers while handing outsized profits to plants that remain operational.The company’s adjusted net income beat the US$7.3 billion average analyst estimate compiled by Bloomberg. BP said oil and gas trading operations both performed strongly. It was the highest since the third quarter of 2008.BP took another big impairment charge this quarter of about US$4 billion, primarily related to transition businesses offshore wind and solar arm Lightsource. O’Neill said BP is working closely with its offshore wind partner to “help the business be as successful as possible.”BP’s major’s refining margin indicator surged to US$46.70 a barrel during the quarter from US$29.60 in the previous period.This advertisement has not loaded yet, but your article continues below.The company’s Customer and Products unit, where oil trading and refining sit, made US$4.8 billion in the quarter. It made US$5.3 billion in all of 2025.BP expects oil and gas production to fall slightly in the fourth quarter due to continued Middle East disruption and other impacts elsewhere.“Every division came in ahead of consensus expectations, supported by some solid operational indicators in the upstream and downstream, as well as another strong quarter for the trading business,” RBC analyst Biraj Borkhataria said in a note on Friday.—With assistance from James Herron.We apologize, but this video has failed to load.This advertisement has not loaded yet.Notice for the Postmedia NetworkThis website uses cookies to personalize your content (including ads), and allows us to analyze our traffic. Read more about cookies here. By continuing to use our site, you agree to our Terms of Use and Privacy Policy.