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bp gains replacement cost profit from oil production & operations

Oil&Gas Materials 2 November 2021 13:46 (UTC +04:00)

BAKU, Azerbaijan, Nov.2

By Leman Zeynalova – Trend:

bp has gained $2.692 billion worth replacement cost (RC) profit before interest and tax from oil production and operations in the third quarter of 2021, as compared to $156 million worth of loss in the same period in 2020, Trend reports with reference to the company.

The company’s RC profit from oil production and operations in the first nine months of 2021 amounted to $7.289 billion, as compared to a loss of $14.649 billion in the first nine months of 2020.

However, the company’s RC profit from these operations was $3.118 billion in the second quarter of 2021.

Underlying replacement cost profit was $3.3 billion, compared with $2.8 billion for the previous quarter. This result was driven by higher oil and gas realizations, higher refining availability and throughput enabling the capture of a stronger environment and a stronger gas marketing and trading result, partly offset by a higher underlying tax charge.

Reported loss for the quarter was $2.5 billion, compared with a $3.1 billion profit for the second quarter 2021. This was driven by significant adverse fair value accounting effects of $6.1 billion pre-tax, primarily due to the exceptional increase in forward gas prices towards the end of the quarter. Under IFRS, reported earnings include the mark-to market value of the hedges used to risk-manage LNG contracts, but not of the LNG contracts themselves. This mismatch at the end of the third quarter is expected to unwind if prices decline and as the cargoes are delivered. The underlying result is adjusted to remove this mismatch.

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