$1.865 billion in net profit, vs $1.588 billion expected

Chris Ratcliffe | Bloomberg | Getty Images

A BP company logo sits on a flag as it flies on the forecourt of a gas station operated by BP Plc in London, U.K.

Oil major BP beat analyst expectations Tuesday, highlighting the improving fortunes of an industry that’s withstood one of the deepest downturns in a generation.

Here are some of the highlights from the earnings:

• Underlying replacement cost profit, used as a proxy for net profit, $1.865 billion in the third quarter vs. $1.588 billion expected by a Thomson Reuters analyst consensus.
• Revenue of $60.808 million vs. $48.043 million over the same period last year.

The British oil giant posted third-quarter underlying replacement cost profit, used as a proxy for net profit, of $1.87 billion, beating analysts’ projections of $1.58 billion.

The firm also announced it would buy back shares over the next three months in order to try to dampen the impact of its scrip dividend program. This is a scheme where a company’s cash reserves are converted into new shares. Buying back shares can boost the price of remaining shares, as there would be less in circulation.

“We are steadily building a track record of delivering on our plans and growing across our businesses,” Bob Dudley, chief executive at BP, said in a statement shortly after the third-quarter results were announced.

“There is still room for further improvement and we will keep striving to increase sustainable free cash flow and distributions to shareholders,” he added.

In recent quarters, major oil companies have been eager to show investors that progress has been made when it comes to covering spending and dividends with cash generation. Further to this, a slump in oil prices over the last two years has prompted firms to wrestle with their portfolios in a bid to become more competitive.

The price of oil collapsed from near $120 a barrel in June 2014 due to weak demand, a strong dollar and booming U.S. shale production. OPEC’s reluctance to cut output was also seen as a key reason behind the fall. But, the oil cartel soon moved to curb production — along with other oil producing nations – in late 2016.