* Underlying profits reach $3.3 bln, beating forecasts
* Strong trading performance boosts results
* BP to acquire further $1.25 bln of shares by early 2022
* Shares down 2% as company reports $2.5 bln loss to
shareholders
(Adds details, updates shares)
By Ron Bousso
LONDON, Nov 2 (Reuters) - BP added more than a
billion dollars to its share buyback programme on Tuesday as it
likened itself to a "cash machine" benefitting from higher oil
and gas prices and a strong trading performance in the third
quarter.
Natural gas and power prices around the world surged as
tight gas supplies collided with strong demand in economies
recovering from the pandemic. <LNG-AS>
BP said it expected natural gas prices to remain strong in
the coming months of peak winter demand.
The company "is a cash machine at these sort of (oil and
gas) prices and the business is running very well," Chief
Executive Officer Bernard Looney told Reuters.
Underlying replacement cost profit, the company's definition
of net earnings, reached $3.32 billion in the third quarter,
exceeding analysts' expectations for $3.06 billion.
That compares with $2.8 billion in profit in the second
quarter and $86 million a year earlier, when energy demand and
prices collapsed because of the pandemic.
The results were boosted by "very strong trading," which
helped BP weather large fluctuations in gas and liquefied
natural gas (LNG) prices throughout the quarter.
Reuters reported last month that BP's trading arm made at
least $500 million https://www.reuters.com/business/energy/exclusive-gas-crisis-helps-land-bp-500-million-windfall-2021-10-26
in the quarter.
"It's not only a trading story. We have had production
growth, we have stronger reliability and availability in our
businesses," Looney said.
Although the headline profit reflects a strong business, BP
reported a loss attributable to shareholders of $2.54 billion
because of accounting effects and hedges as a result of
fluctuations in LNG prices, which are expected to balance out
over time.
BP shares were down 2.5% by 1320 GMT, compared with a 1.1%
decline in the broader European energy index.
BUYBACKS
The company said it would repurchase a further $1.25 billion
of its shares by early 2022, after buying $900 million during
the third quarter. BP plans to maintain buybacks at a rate of
around $1 billion per quarter if oil prices remain at $60 a
barrel or over.
BP's net debt fell further to $32 billion from $32.7 billion
in the second quarter.
The long-term outlook for fossil fuel demand is uncertain as
world leaders gathers this week in Glasgow, Scotland, for a U.N.
conference https://www.reuters.com/business/cop critical to
averting the most disastrous effects of climate change.
BP plans to sharply reduce its carbon emissions https://www.reuters.com/article/bp-results-idCNL8N2F61A0
in the coming decades by increasing its renewable power
capacity 20-fold by 2030, while reducing its oil output by 40%
and diverting more funds to low-carbon investments.
Its profits today come entirely from oil and gas operations.
The company said it plans to spend $14 to $16 billion in
total next year, with around $9 billion going to oil and gas
projects. BP will boost its spending on U.S. shale oil and gas
to $1.5 billion in 2022 from around $1 billion this year, Chief
Financial Officer Murray Auchincloss told analysts.
"The company can talk about 'Performing while Transforming'
all it likes but it needs to prove to shareholders and the
markets as a whole that it can transition to renewables in a way
that doesn't hammer its margins, and the jury is likely to
remain out on that," Michael Hewson, chief market analyst at CMC
Markets UK, said in a note.
Looney told Reuters the company had not faced calls from
investors to split into separate low-carbon and oil and gas
divisions, after an activist fund called for rival Royal Dutch
Shell to break up its business last week.
(Reporting by Ron Bousso; Editing by Kenneth Maxwell, Mark
Potter and Barbara Lewis)
