BP promises fundamental reset as Q4 profit hit four-year low

BP announced a quarterly profit of $1.1 billion on Tuesday. This was lower than expected, and the lowest since 2004. The company also promised to reset its strategic direction after it became known that Elliott Management, an investor, had acquired a stake.

BP has experienced a decline of earnings for the entire year 2024. This follows two years of record earnings, when energy prices stabilized and global oil demand weakened.

But BP is underperforming its peers, and CEO Murray Auchincloss has been put under pressure to bring about change.

The share price of 467.90 pence was up 0.6%, or about flat.

It had rallied on Monday as it was expected that Elliott's purchase of an unnamed stake would force change.

The decline of 61% in the fourth-quarter, compared to the previous year, made this the worst quarter since 2020's fourth quarter when pandemics and lockdowns lowered demand for oil.

Auchincloss stated in a press release that "we now plan to fundamentally re-set our strategy and drive even further improvements in performance in the service of growing returns and cash flow."

Auchincloss is working to rebuild investor confidence after Bernard Looney abruptly resigned in September 2023 due to failings in disclosing relationships between employees.

The lower realized refining margins impacted the company's earnings. The average fourth-quarter refining margin was $13.1 per barrel. This is down from $18.5 per barrel last year.

BP expects that margins will remain low for the current quarter and there will be a reduced level of refinery turn-around activity compared to the fourth-quarter.

BP's underlying net profit (defined as the company's net income) dropped from $2.99 billion to $1.17 in the three-month period ended December 31.

This compares to forecasts of 1,26 billion dollars in a survey conducted by the company and $1,20 billion according to LSEG's data.

(source: Reuters)