BP reported a big rebound in third-quarter earnings, fuelled by stronger refining margins and improved gas trading.

Underlying replacement cost profit, BP's preferred earnings measure, rose to $8.46bn from $2.21bn a year earlier and comfortably exceeded analyst forecasts of $7.33bn. Earnings were also up $2.7bn on the previous quarter. Profit attributable to shareholders increased to $4.7bn, compared with $1.2bn in the same period last year.

The performance was driven by significantly stronger realised refining margins and a robust contribution from gas marketing and trading. BP's average refining indicator margin rose to $46.70 a barrel, up from $15.80 a year ago and $29.60 in the second quarter.

Operating cash flow nearly doubled to $14.8bn from $7.8bn a year earlier, helping the group reduce net debt from $22.3bn at the end of June. BP said strong cash generation and the allocation of excess cash towards debt reduction allowed it to achieve its net debt target ahead of schedule, with net debt cut by $8.4bn to $13.9bn.

Operational performance also improved during the quarter, with upstream plant reliability increasing to 95.3% from 92.4% and refining availability rising to 96.5% from 94.7%. Production was broadly stable at 2.2 million barrels of oil equivalent per day.

Chief executive Meg O'Neill said: "These are dynamic times with volatility and disruption to trade flows continuing to define energy markets. The industry as a whole has been showing remarkable adaptability.

"I'm proud of the contribution bp is making to keep energy flowing. We maintained upstream production at around 2.2 million barrels per day, upstream plant reliability and refining availability both improved compared to the previous quarter, and our trading performance was also higher.

"We have now delivered our net debt and structural cost reductions targets and have line of sight on the remaining two of the four primary financial targets we set ourselves for 2027.

"And as we move forward, we will continue working with urgency to turn one good set of results into strong performance quarter after quarter. We have much more to do on the five priorities set out at mid-year to deliver a step change in performance and realize the full potential of this company."

BP continued to reshape its portfolio during the quarter, completing the sale of its Gelsenkirchen refinery, agreeing to sell its Austrian mobility and convenience business and launching processes to market its North Sea and Archaea operations. The planned disposal of Castrol is expected to generate a further $6bn for the balance sheet.

However, the group recorded $4bn of impairments, primarily linked to transition businesses, underlining the costs associated with its ongoing portfolio transformation.

The company will outline the next phase of its strategy on 15 December, setting out plans to build a simpler, stronger and more valuable business.

Russ Mould, investment director at AJ Bell, said: "There is no doubt that BP chief executive Meg O'Neill has been dealt a useful hand thanks to the surge in energy prices this year.

"O'Neill's simplification and streamlining of the business continues to progress and should be well-received by investors. However, eventually there will have to be a credible growth strategy to follow up on the fix-up job.

"December's strategy day is O'Neill's opportunity to show she has the vision to lead the business into a new phase in its development."

---