BP, Shell and Go-Ahead

“The FTSE100 opened on the front foot in the wake of a lower Wall Street and a mixed session in Asia. On the economic front, investors are looking to manufacturing purchasing managers' index data from UK and the US,” says AJ Bell Investment Director Russ Mould.

“Oil giants BP and Royal Dutch Shell were at opposite ends of the blue-chip board following their third quarter figures. Shell led the index following a strong operational performance while BP languished near the foot of the board after its underlying profits were virtually halved at £933m. Both are restructuring and cutting costs as they face challenges posed by lower oil prices.

“Shell has been buoyed by the speed of the integration of BG into the group which is now essentially done and has been completed well ahead of plan. Underlying operational costs are already $9bn lower than the two groups’ costs in 2014. And they’re set to reduce further on a like-for-like basis as deal synergies and improvements are delivered in full.

“BP’s figures were ahead of market forecasts but while profits on an underlying replacement cost basis were up on the previous three months, they were down by nearly half from $1.8bn a year ago. BP's cash costs over the past four quarters were $6.1 billion lower than in 2014 with the aim to reach breakeven at $50-$55 per barrel against $60 in the first half of 2015.

“Bus and rail group Go-Ahead is on track after a robust first quarter. Passenger revenue has been hit by strikes on the Southern network, which is part of its 65%-owned Govia Thameslink Railway, but overall the group remains in a good financial position, with strong cash generation and a strong balance sheet.”

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