A low oil price and bad weather in the Gulf of Mexico combined to form a deadly cocktail for oil giant BP as the company said on Tuesday that its net income had dropped by nearly 40%.
Underlying replacement cost profit, the term BP uses for net income, fell to 2.3 billion dollars in the third quarter of the year, 40% below last year’s comparable figure.
But the dramatic drop was still considerably better for the company than analysts had been predicting, as the company’s refineries outperformed.
A consensus of analyst estimates, compiled by BP, estimated that the figure would be 1.7 billion US dollars (£1.3 billion).
“BP delivered strong operating cash flow and underlying earnings in a quarter that saw lower oil and gas prices and significant hurricane impacts,” said outgoing chief executive Bob Dudley.
It will likely be the last third quarter results presented by the American, who has announced that he will be stepping down next year. He is set to be replaced by Bernard Looney, the Irishman currently in charge of upstream, the BP arm which explores and produces new oil and gas.
It has been a quarter of change, with the business making big inroads into a 10 billion dollar (£7.8 billion) programme to sell off assets. In August, BP said it had reached a deal that will see Hilcorp take over all its oil fields and operations in Alaska, a 7.2 billion dollar deal (£56 billion).
But the sale also had a sting in the tail as the company was forced to write off 2.6 billion dollars (£2 billion) because of tax charges, swinging BP to a 749 million dollar (£583 million) loss for the quarter.
“Today’s third quarter numbers weren’t expected to come in close to the levels seen in second quarter 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,” said Michael Hewson, chief market analyst at CMC Markets.
The oil major also entered troubled waters as the impact of Hurricane Barry, which ripped through the Gulf of Mexico in July, shutting down oil fields, helped push down oil and gas production by 2.5%.
Production is expected to increase in the fourth quarter from the period before as the company completes maintenance on its sites.