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BP beats third quarter estimates and returns to revenue on enhancing oil demand

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A BP company logo is displayed on a fuel pump in the forecourt of a gas station operated by BP Plc in London, UK.

Chris Ratcliffe | Bloomberg | Getty Images

LONDON – Energy giant BP reported a small profit for the third quarter on Tuesday, beating analysts' expectations as the company benefited from stronger oil prices and the lack of significant exploration write-offs.

The underlying replacement cost gain for the third quarter, used to replace net income, was $ 100 million. That compared to a loss of $ 6.7 billion in the second quarter and a profit of $ 2.3 billion in the third quarter of 2019.

Refinitiv analysts had expected BP to post a loss of $ 347 million in the third quarter.

A dividend of 5.25 cents per share was announced for the quarter.

BP said the rebound in oil and gas prices and demand helped the company return to profits in the third quarter. However, this was partially offset by a "significantly lower oil trading result".

BP's shares rose more than 2% during early morning trades.

The results come because sentiment in the energy market remains subdued and a surge in coronavirus cases worldwide hurt prospects for oil demand growth.

A wave of new Covid-19 infections has caused some countries to impose new restrictions this winter.

The international reference Brent crude oil futures were trading at $ 40.70 a barrel Tuesday morning, up around 0.6% for the session, while the U.S. West Texas Intermediate futures were trading at $ 38.78 increased by more than 0.5%.

Both contracts were down over 3% in the previous session.

"Priority is execution"

"Now that we have detailed our new strategy, our priority is execution. Despite a challenging environment, we are doing just that – performance during transformation," said Bernard Looney, CEO of BP, in a statement.

Looney said the company remains "firmly focused on cost and capital discipline" and "firmly committed" to its updated financial framework, including dividends.

In addition to the results for the second quarter in August, the energy company announced a focal point for a new strategy. The move would help the company move to clean energy in line with its plan to become a net-zero carbon company by 2050 or earlier.

BP announced that it would increase its annual low-carbon investment tenfold to around $ 5 billion per year within 10 years. The aim was also to develop a net capacity for renewable energies of around 50 gigawatts by 2030 – a 20-fold increase compared to 2019.

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Katherine Clark