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Profit drops 30% from year ago to $2.3 billion

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Weak refining and oil trading weigh on profit

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BP maintains rate of share buybacks

(Adds detail throughout, graphic)

By Ron Bousso

LONDON, Oct 29 (Reuters) - BP on Tuesday reported

a 30% drop in third quarter profit to $2.3 billion, the lowest

in almost four years, weighed down by weaker refining margins

and oil trading results.

The drop in profit from a year earlier was, however, smaller

than expected. It comes amid a slowdown in global economic

activity and oil demand, particularly in China, and raises

pressure on CEO Murray Auchincloss who has vowed to boost BP's

performance amid investor concerns over its energy transition

strategy.

"We have made significant progress since we laid out our six

priorities earlier this year to make BP simpler, more focused

and higher value," Auchincloss said in a statement.

BP shares, which opened 0.8% lower on Tuesday, have

underperformed those of its rivals so far this year, falling 15%

compared with a 2% decline for Shell and a 19% gain for

Exxon Mobil ( XOM ), as investors question the company's ability

to generate profits.

Auchincloss, who took up the job in January, has vowed to

focus on high-margin businesses, distancing himself from

predecessor Bernard Looney's strategy to rapidly expand

renewables and reduce oil and gas output.

Reuters reported earlier this month, citing sources, that BP

has abandoned a flagship target to cut oil and gas output by

2030. The company has also scaled back its low-carbon hydrogen

investments and plans to sell its U.S. onshore wind operations.

Sources also told Reuters that BP is considering selling a

minority stake in its offshore wind business.

Auchincloss said on Tuesday that BP has the potential to

grow oil and gas output through the end of the decade while it

also continues to make high-grade investments in low-carbon and

renewables.

WEAK REFINING

BP's underlying replacement cost profit, the company's

definition of net income, reached $2.27 billion in the third

quarter, exceeding forecasts of $2.05 billion in a

company-provided survey of analysts but down from $2.8 billion

in the previous quarter and $3.3 billion a year earlier.

The results were the weakest since the fourth quarter of

2020, when profits collapsed during the pandemic.

BP's oil and gas production rose by 3% from a year earlier

to 2.38 million barrels of oil equivalent per day (boed),

helping to offset a drop in refining margins and weaker oil

trading. Higher natural gas prices further boosted earnings,

although gas trading was average in the quarter, BP said.

Global oil refiners are seeing profitability drop to

multi-year lows in a sharp reversal for an industry that had

enjoyed surging post-pandemic returns, underlining the extent of

the current demand slowdown.

The energy giant maintained its dividend at 8 cents a share

after raising it in the previous quarter. It also kept the rate

of its share buyback programme at $1.75 billion over the next

three months and committed to do so again for the following

three months.

Net debt rose to $24.3 billion from $22.6 billion at the end

of June, mostly because of the around $2.5 billion in debt

assumed following the completion of the acquisition of the

outstanding 50% in its solar joint venture Lightsource BP last

week.

Its debt-to-market capitalisation ratio, known as gearing,

rose to 23.3% from 20.3% a year earlier.