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* Underlying profits reach $2.3 bln in the third quarter
* BP takes $2.6 bln charge on large divestments
* Shares down around 0.7%
(Recasts, updates throughout)
By Ron Bousso
LONDON, Oct 29 (Reuters) - BP's profits fell sharply
in the third quarter, hurt by lower oil prices, but strong
refining operations helped the company beat expectations even
after taking a one-off charge of $2.6 billion linked to large
asset sales.
The British oil company made its first net loss in more than
three years due to the charge, but its underlying performance
remained strong.
Cash flow from operations was unchanged in the quarter from
a year earlier at $6.1 billion despite a 17% drop in oil prices.
"BP delivered strong operating cash flow and underlying
earnings in a quarter that saw lower oil and gas prices and
significant hurricane impacts," Chief Executive Officer Bob
Dudley said in a statement.
The $2.6 billion charge will not come as a surprise to
investors after BP flagged earlier this month it would take a
non-cash charge of $2 billion to $3 billion in the quarter as it
gets closer to disposing of assets worth $10 billion by the end
of 2019, a year ahead of schedule.
As a result, the company reported a net loss of $700
million, its first since the second quarter of 2016.
So far this year, BP's proceeds from divestments reached
$1.4 billion.
BP last year acquired BHP's U.S. shale assets for $10.25
billion that turned BP into one of the largest shale oil
drillers. It announced the sale of its Alaskan business to
Hilcorp Energy Co for $5.6 billion.
"Today's Q3 numbers weren't expected to come in close to the
levels seen in Q2 given the decline in oil prices seen since
then, however they still show a company that is nimbler and more
efficient than it was a decade ago," Michael Hewson, chief
market analyst at CMC Markets said in a note.
BP shares were down 0.7% shortly after trading opened in
London
Third-quarter underlying replacement cost profit, the
company's definition of net income, fell 40% from the year
earlier period to $2.3 billion. That exceeded a forecast of
$1.73 billion in a company-provided survey of analysts and
compared to $2.81 billion in the second quarter of 2019.
HURRICANE
Oil and gas production, excluding BP's share from its 19.75%
stake in Russia's Rosneft, was down 2.5% from a year earlier at
2.568 million barrels of oil equivalent per day as a result of
maintenance at several high-margin fields and a two-week
disruption to production in the U.S. Gulf of Mexico from
Hurricane Barry.
BP said production in the fourth quarter would be higher
than in the previous quarter as maintenance winds down.
The weakness in oil and gas production was offset by a
strong performance in its refining and chemicals businesses,
higher than expected earnings from Rosneft, which helped lower
BP's tax rate.
Weaker oil prices in the third quarter from a year earlier
also weighed heavily on profits of other energy companies
including Italy's Eni and Norway's Equinor.
BP earlier this month said CEO Dudley would retire next year
following a tumultuous decade at the helm of the company. He
will be succeeded by 49-year-old Bernard Looney, BP's head of
upstream.
(Reporting by Ron Bousso, editing by Louise Heavens/Kirsten
Donovan/Jane Merriman)
