BP earnings plunge 47%, cost-cutting goal raised

Written by Bloomberg | Updated: Oct 28 2009, 05:30am hrs
BP Plc, Europes second-largest oil company, posted third-quarter earnings that beat analyst estimates and raised its cost-cutting target for the year, sending the shares to a 16-month high.

Earnings excluding one-time items and inventory changes fell 47% to $4.67 billion from a year earlier. That exceeded the $3.25 billion median estimate of 11 analysts compiled by Bloomberg.

BP, the first of Europes oil majors to report earnings, expects cash costs to be around $4 billion lower in 2009, compared with a previous target of $3 billion. Under chief executive officer Tony Hayward, BP has ramped up output in the Gulf of Mexico to counter a drop in refining profits that have plunged by almost two-thirds. Strong balance sheets will increasingly become a strategic advantage as majors vie for investment opportunities, said Gianna Bern, president of Brookshire Advisory & Research Inc in Flossmoor, Illinois. BP advanced as much as 5.5%to 598 pence in London, the highest since June 2008, and traded at 594.5 pence as of 8:35 am local time. The stock is up 13% this year, compared with a 6.9% gain for Royal Dutch Shell Plc, its larger rival thats due to release earnings on October 29.

Exxon Mobil Corp, the largest US company, will report third-quarter earnings on the same day as Shell Occidental Petroleum Corp, the US oil producer that agreed to buy Citigroup Incs Phibro LLC unit, last week said profit fell 59% on lower prices. Earnings at BP have exceeded analysts expectations for the past three quarters. That followed BPs first loss in seven years in the fourth quarter after crude futures plunged.