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BP returns to profit after oil demand boom

by LLB Editor
27th Oct 20 9:31 am

Better than forecast numbers from oil major BP are just as much an indication of how low expectations had fallen ahead of its third quarter update as a sign of tangible green shoots for the companyโ€™s recovery.

While better than the loss which had been pencilled in and a big improvement on the record loss posted for the second quarter, the uncomfortable truth is a huge amount of manpower, resources and effort was put into achieving a profit of less than $100 million.

โ€œThe recovery in oil demand which underpinned a return to profit may now be threatened again by a second wave in the Covid-19 pandemic,” said Russ Mould from AJ Bell.

โ€œProbably the most significant achievement chalked up in the period was the reduction in net debt, with the divestment of its petrochemicals business to Ineos expected to provide a further injection of funds in the near future.

โ€œBP faces the challenge of investing in a transition to a cleaner, greener future while keeping its balance sheet under control and maintaining dividend payments.

โ€œThere still seems to be healthy scepticism in the market about CEO Bernard Looneyโ€™s pledge to keep โ€˜performing while transformingโ€™. Sooner or later it feels like something has to give and it seems likely the dividend will remain in question as far as investors are concerned for the foreseeable future.โ€

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