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(Alliance News) - A combination of lower prices, bad weather, and maintenance work has sent BP to a quarterly loss, the FTSE 100 oil major reported on Tuesday.
BP posted a replacement cost loss for the third quarter of 2019 of USD351 million, after a USD1.78 billion profit in the second quarter and USD3.09 billion in the third quarter last year.
On an underlying basis, BP's RC profit fell to USD2.25 billion, down 20% on a quarterly basis and 41% year-on-year.
The company was hit by "significantly" lower earnings in the Upstream division due to lower commodity prices, maintenance work, and the impact of poor weather in the Gulf of Mexico. Downstream, BP said, had a "strong" quarter operationally.
Upstream posted a RC loss of USD1.05 billion for the quarter after profits both in the second quarter and the third quarter of 2018. On an underlying basis, Upstream RC profit figure fell 37% quarterly and 47% year-on-year.
The Downstream unit delivered a 57% quarterly rise in RC profit, but it posted a 10% decline year-on-year.
Over the first nine months of the year BP is still in profit. RC profit has more than halved, however, to USD3.52 billion with the underlying figure down 20%.
Upstream production for the third quarter was 3.7 million barrels of oil equivalent per day, up from 3.6 million barrels a year before. However, underlying production, excluding BP's stake in Russia's Rosneft, fell 2.5%.
BP expects fourth-quarter production to improve on the third quarter as maintenance is completed.
BP has declared a 10.25 US cent dividend for the quarter, unchanged from the second quarter payout, while removing the scrip dividend alternative.
Net debt at the end of the quarter was USD46.5 billion, 21% higher than the same time a year before, with gearing rising to 31.7% from 27.1%. BP said it is on track with its divestment programme, and expects the total amount completed in 2019 to reach USD10 billion by the end of the year.
"BP delivered strong operating cash flow and underlying earnings in a quarter that saw lower oil and gas prices and significant hurricane impacts. Our focus remains firmly on maintaining financial discipline and delivering safe and reliable operations throughout BP," said Chief Executive Bob Dudley.
"We're also continuing to advance our strategy, making strong progress with our divestment plans and building exciting new opportunities in fast-growing downstream markets in Asia."
Here is what you need to know at the London market open:
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MARKETS
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FTSE 100: called down 13.5 points at 7,317.78
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Hang Seng: down 0.4% at 26,785.75
Nikkei 225: closed up 0.5% at 22,974.13
DJIA: closed up 132.66 points, 0.5%, at 27,090.72
S&P 500: closed up 0.6% at 3,039.42
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GBP: soft at USD1.2853 (USD1.2861)
EUR: flat at USD1.1090 (USD1.1095)
Gold: up at USD1,493.00 per ounce (USD1,490.38)
Oil (Brent): flat at USD61.24 a barrel (USD61.26)
(changes since previous London equities close)
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ECONOMICS AND GENERAL
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Tuesday's Key Economic Events still to come
US FOMC two-day monetary policy meeting begins.
0930 GMT UK money and credit
1630 EDT US API weekly statistical bulletin
0855 EDT US Johnson Redbook retail sales index
0900 EDT US S&P CoreLogic Case-Shiller Indices
1000 EDT US consumer confidence index
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UK Prime Minister Boris Johnson is expected to call on members of Parliament once again to support his quest for a pre-Christmas election in order to break the Brexit deadlock. Johnson has put his deal on hold in an anticipated bid to convince the Commons to vote on Tuesday for a December 12 election in his fourth time of asking. But he may again be defeated with the date proving controversial for the Liberal Democrats and the SNP, who have signalled support for an election being held three days earlier. The PM failed on Monday to get the two-thirds majority needed to secure an election under the Fixed-Term Parliaments Act, but was planning on a fresh attempt a day later. The anticipated short Bill setting aside the FTPA would instead require the support of a simple majority of MPs and is expected to be hurried through all Commons stages in a single day.
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UK house prices growth remained little changed in October amid a slowdown against a backdrop of global growth and Brexit uncertainty, data from building society Nationwide revealed. The Nationwide House Price Index rose to 429.1 points in October from 428.4 in September, meaning that on a monthly basis prices rose 0.2% in October on September levels. On a year before, house prices were 0.4% higher in October. Economist consensus was for a print of 0.2% growth in October, in line with the 0.2% reported in September.
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US Defence Secretary Mark Esper said US forces are being repositioned to secure oil fields in eastern Syria following the death of Islamic State leader Abu Bakr al-Baghdadi. Esper said the US would continue moving to secure the forces until it is assured that Islamic State cannot gain access to them. The US defence secretary and General Mark Milley, chairman of the joint chiefs of staff, said the mission includes denying Syrian and Russian forces access to the fields.
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House Democrats will hold a vote this week to formalize their impeachment inquiry into President Donald Trump, according to US news reports. The resolution will come up for a vote on the floor of the House, House Speaker Nancy Pelosi said in a letter to fellow Democrats. She said the resolution "affirms the ongoing, existing investigation that is currently being conducted by our committees as part of this impeachment inquiry." She also said it establishes the procedure for future investigative steps and would "eliminate any doubt as to whether the Trump administration may withhold documents, prevent witness testimony, disregard duly authorized subpoenas, or continue obstructing the House of Representatives."
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BROKER RATING CHANGES
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GOLDMAN REINITIATES PRUDENTIAL WITH 'BUY' - PRICE TARGET 1560 PENCE
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JPMORGAN CUTS ROYAL MAIL TO 'UNDERWEIGHT' ('NEUTRAL') - TARGET 192 (252) PENCE
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COMPANIES - FTSE 250
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Contracts-for-difference trader Plus500 reported a "strong improvement" in the third quarter compared to the second, with revenue growth 18% quarterly to USD110.6 million. Year-on-year, Plus500's revenue increased 10%. Earnings before interest, tax, depreciation, and amortisation rose 39% year-on-year to USD70.1 million. The company reported 18% growth in new customers year-on-year, though compared to the second quarter new customer numbers fell 7%. Plus500 said performance has benefited from "geopolitical events" which has led to heightened trading activity.
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Oil field services firm Hunting said trading conditions in the third quarter continued to be challenging, especially due to a slowdown in US onshore completions. As a result, Hunting said 2019 Ebitda is likely to be at the lower end of market expectations. The core Hunting Titan business delivered third-quarter revenue and operating profit below the figures recorded in the first and second quarters of 2019.
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COMPANIES - INTERNATIONAL
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Google-owner Alphabet said third-quarter profit sank as the technology firm continued to invest in the business, despite revenue growing strongly courtesy of mobile search. For the three months ended September, pretax profit narrowed 14% to USD8.63 billion from USD10.08 billion the year prior. Basic earnings per share fell 23% to USD10.20 from USD13.21 the year prior. This was despite revenue rising 20% to USD40.50 billion from USD33.74 billion the year before. Profit performance was hurt by a sharp rise in costs during the period. In particular, research & development costs jumped to USD6.55 billion from USD5.23 billion the year prior. In addition, Other Income sank to a USD549 million loss from a USD1.46 billion gain the year before primarily due to fluctuations in prices of shares held by the firm. "I am extremely pleased with the progress we made across the board in the third quarter, from our recent advancements in search and quantum computing to our strong revenue growth driven by mobile search, YouTube and Cloud," Google Chief Executive Officer Sundar Pichai said.
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Telecommunications firm T-Mobile US said it delivered another "blockbuster" third quarter, with profit and revenue jumping amid a strong customer additions performance. For the three months ended September, pretax profit widened 6.2% to USD1.20 billion from USD1.13 billion the year prior with earnings per share up 8.5% to USD1.02 from USD0.94. This was after revenue rose 9.7% to USD5.75 billion from USD5.24 billion the year before.
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Swiss drug maker Roche Holding said it has extended the deadline for its USD4.3 billion acquisition of biotechnology firm Spark Therapeutics amid regulatory delays. In February, Roche proposed a USD114.50 per share all-cash deal to buy gene therapy development firm Spark. At the time, Spark had one commercial asset and four programmes currently in clinical trials. With the original deadline for the offer due to expire on Wednesday, Roche has now extended the offer deadline until November 25.
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Chinese internet start-up ByteDance, whose globally popular app TikTok has raised US security concerns, on Tuesday denied reports that it was considering an initial public offering in Hong Kong in the first quarter of next year. ByteDance, which is said to be valued at up to USD75 billion, was reported by the Financial Times to be eyeing a listing in the city despite months of violent political protests there. The report had cited unidentified sources. "There is absolutely zero truth to the rumours that we plan to list in Hong Kong in Q1," the Beijing-based company said in a statement. It gave no further details.
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Tuesday's Shareholder Meetings
Vela Technologies
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By Tom Waite; thomaslwaite@alliancenews.com
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