Profit adjusted for one-time items and inventory changes totaled $400 million, falling short of the $567.7 million average estimate of analysts. Unlike peers Royal Dutch Shell Plc and Exxon Mobil Corp., which said cash flow now covered spending and dividends at current oil prices, BP said it wouldn’t achieve that until the end of the year, and only if Brent crude rises to about $60 a barrel.
A pattern has emerged across the industry that’s reinforced by BP’s results. Profits from oil and gas production are rising with higher crude prices, but are being offset by weaker-than-expected earnings from refining and trading.
“Almost all of the majors have missed earnings estimates and the big theme for the quarter has been weaker refining,” said Brendan Warn, a London-based analyst at BMO Capital Markets. “Maybe people were expecting things to turn around too soon.”
BP’s adjusted downstream profit before interest and tax, which includes refining and trading, fell 28 percent in the quarter to $877 million, the company said in a statement. The partial shutdown of its U.S. Whiting refinery, BP’s largest, in the period hurt sales, while the expense of the turnaround drove up costs.
Net debt continues to climb, with the leverage ratio rising to 26.8 percent at the end of 2016 from 21.6 percent a year earlier, the statement shows. BP targets a net debt ratio of 20 percent to 30 percent.
Oil and gas production totaled 2.19 million barrels of oil equivalent a day in the quarter, down 5.5 percent from a year earlier.
The company’s shares have fallen 6.5 percent in London this year, compared with a 3.1 percent decline for Shell’s B shares and a 3.3 percent drop at Total SA. BP rose 44 percent last year, the first annual gain in three.