Major Oil Business BPs (LON:BP) Profits Close To Half

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BP (LON:BP), which was earlier known as British Petroleum, has revealed that their profits for the third year have fallen by close to 50 percent as compared to the same time last year. The continued falling prices of oil around the world have been blamed for this. In the issued statement the company blamed “weaker price and margin environment” for the poorer financial performance.

But questions are being raised by analysts, because in the same period, the Netherlands-based Shell (AMS:RDSA) actually reported an increase in profit by 18 percent. Shell recently acquired the BG Group and had an infusion of cash as a result.

Shell Doing Better Than BP

In the third quarter, Shell’s profit stands at $2.8 billion, making it the highest in the last five quarters. On the other hand, BP reported just $933 million. In the same period last year, the business had made a profit of $ 1.8 billion, making it almost a 50 percent fall. Energy analysts are saying that both the businesses are heavily banking on the recovery of global oil prices for their future profits.

“Despite the respite provided by an improved oil price, conditions remain tough in the oil and gas sector”, adds Nicholas Hyett, who works as an equity analyst with Hargreaves Lansdown.

BPs figures were, however, still better than what the market expected. Brian Gilvary, who is the Chief Financial Officer of British Petroleum said, “We continue to make good progress in adapting to the challenging price and margin environment”. He assured investors by saying that BP remains committed to investing in the right options, businesses, and projects to deliver good growth and profits in the future.

Shell Benefits From One-Off Tax Gain

The BP stock was up by close to a percent in the London exchange because of the better than expected result. The Shell stock, however, fell by 1.03 percent, as much of the company’s profits are coming from a one-off tax gain. Some investors are wary that Shell may not be able to achieve the same results in the next quarter. Dividend payments could be at risk.

In another significant announcement, BP (LON:BP) announced a cut in their investment plan for the year. The expected spending will now be $16 billion, while for next year it is going to be between $15 billion and $17 billion. Earlier the business had disclosed an investment between $17 billion and $19 billion this year.