On any given day, the share price movements of Royal Dutch Shell (RDSB) and BP (BP.) tend to move in tandem with expectations for the oil price. Tuesday 1 November, when both of London's oil majors announced third-quarter results, proved an exception.
Shell's shares rose 4 per cent on news that production in the three months to September had increased by a quarter to 3.6m barrels of oil equivalent a day, thanks to strong output from the assets acquired from BG. This resulted in a 120 per cent increase in net operating cash before tax, which together with lower impairment charges for the period meant underlying profit of $2.8bn (£2.3bn) for the period, smashing analyst expectations.
In a further sign that the company is prioritising near-term cash flows over resources, Shell said it expected 2017 investments to be $25bn: at the bottom end of previous guidance. Panmure Gordon, which raised its price target to 2,500p on these numbers, forecasts EPS of $0.77 and $1.35 this year and next.
BP could not point to the benefits of a major acquisition, although its underlying replacement cost profit - the industry's preferred measure of profitability - comfortably beat a rather pessimistic set of consensus expectations for the period. Nonetheless, shares in the group dropped by 4 per cent after results for the upstream division, which has recorded a $942m loss for the year to date, fell below analyst expectations on the back of shrinking volumes.
And while the total group's 49 per cent year-on-year decline in underlying replacement cost profit was better than some BP watchers had feared, this included a greater than expected $164m tax credit, a weaker contribution from the company's stake in Rosneft, and narrowing margins in the fuels business. Total capital expenditure is now expected to hit $16bn this year, but could edge up to $17bn in 2017.