BP PLC beat third-quarter earnings forecasts by a big margin as its cost-cutting program proved more successful than expected, prompting the UK oil major to increase its target for savings for the year.
Dealers said they expected the London-based company’s shares to open 3 percent higher on the earnings.
BP said third-quarter replacement cost net profit, which strips out unrealized gains or losses related to changes in the value of fuel inventories, fell 50 percent to US$4.98 billion, because of lower oil and gas prices.
Excluding one-offs, the result was US$4.67 billion, compared with an average forecast of US$3.16 billion from a poll of 11 analysts.
A lower-than-expected tax rate flattered the result, but reductions of more than 15 percent in costs in the oil and gas production and refining units were the key driver of the better-than-expected earnings, a spokesman said.
“These results demonstrate real operational momentum across the company. We continue to transform our cost base,” chief executive Tony Hayward said in a statement.
The strong progress on squeezing out costs could boost investor optimism about cost-cutting programs at rivals such as Royal Dutch Shell, which reports on Thursday.
The company said oil and gas production averaged 3.917 million barrels of oil equivalent per day, up 7 percent compared with the same period last year.
BP said its debt-to-equity or gearing ratio fell in the quarter, against expectations that it would rise.
BP and its rivals had been borrowing this year to meet high dividend payments, or in some cases, cutting their dividends.
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