BP Q3 earnings beat estimates, trims spending again

BP Q3 earnings were higher than analysts expected. The company still plans to lay off about 7,000 workers by the end of 2017. BP photo.

BP Q3 net income at $933 million

By Karolin Schaps

LONDON, Nov 1 (Reuters) – British Petroleum reported a near halving in third-quarter earnings on Tuesday and cut its 2016 investment plans by another $1 billion as weak oil prices cut into profits, yet tighter spending helped BP Q3 beat analysts’ estimates.

Click here for video: CEO Mike Swihart explains how well automation reduces costs, boosts production for Permian Basin operators. Systems start at $3,000 fully installed by Production Lift Technologies of Midland, Texas.

BP, which plans to lay off around 7,000 workers by the end of next year, said it was expecting further charges related to redundancies and other restructuring measures next year, adding to the $2.1 billion in charges incurred since the end of 2014.

BP’s third-quarter underlying replacement cost profit, the company’s definition of net income, fell to $933 million from $1.8 billion a year earlier but beat the $780 million expected by analysts.

“We remain on track to rebalance organic cash flows next year at $50 to $55 a barrel,” Chief Financial Officer Brian Gilvary said in a statement.

Oil prices are now trading at around $49 a barrel, meaning BP is banking on a slight rise in prices going into next year.

To achieve a leaner balance sheet, BP said it would lower its 2016 capital expenditure to around $16 billion from the $17-19 billion expected at the start of the year, and target $15-17 billion for 2017.

BP joined the ranks of Shell, France’s Total and U.S. majors Exxon Mobil and Chevron in beating expectations, with cost cuts helping to improve margins.

Norway’s Statoil and Italy’s ENI disappointed, however.

BP said asset sales stood at $2.7 billion at the end of the quarter and the company remained on track to sell $3-5 billion of assets this year.

(Editing by Jason Neely)