BP reported its highest profits since 2014 thanks to rising oil prices and production, although debts increased as it continues to count the cost of the Gulf of Mexico oil spill.
The oil giant said underlying replacement cost profits – the industry’s preferred measure – rose 71 per cent to $2.6billion (£1.9billion) for the first three months of 2018, up from $1.5billion (£1.1billion) a year earlier.
This was the highest quarterly profit since 2014, when oil prices more than halved from over $100 a barrel to just below $50. But a recent rebound in global crude has given a boost to oil companies.
Rising profits: BP is benefiting from a recent rebound in oil prices after a three-year downturn
Brent crude, which averaged a price of about $66 a barrel in the first three months of March, hit a new four-year high of $76 a barrel yesterday.
Last week Royal Dutch Shell also reported its highest quarterly numbers for three years, with underlying quarterly profits 42 per cent higher at £3.8billion.
BP shares rose by 0.7 per cent, or 3.65p, to 541.74p in morning trading.
BP said it also profited from new major exploration and production projects, with underlying profits at its upstream division more than doubling to $3.2billion (£2.3billion) – the highest figure since 2014.
Production rose 6 per cent in the quarter compared to last year.
The group also said it was making some final investment decisions for four new projects in Oman, India and two in the UK North Sea.
Rising production and oil prices mean operating cash flow increased by $1billion to $5.4billion, excluding Gulf of Mexico repayments.
However, net debt rose from $38.6billion to $40billion, with the ratio of net debt to equity edging up to 28 from 27 in the fourth quarter.
It comes as BP continued to count the cost of its 2010 Deepwater Horizon tragedy in the Gulf of Mexico, with another $1.6billion (£1.2billion) forked out in the first quarter.
This included $1.2billion (£873million) for the final payment of its 2012 settlement with the Department of Justice.
BP, which has been selling off assets in recent years amid falling profits, said it had completed another $200million worth of divestments.
It kept its guidance for between $2billion (£1.5billion) and $3billion (£2.2billion) over the full year.
Chief executive Bob Dudley cheered ‘another strong set of results’.
He added: ‘Moving through 2018 we’re determined to keep delivering our operational targets and maintaining capital discipline while growing cash flow and returns.’
Chief executive Bob Dudley cheered ‘another strong set of results’
Nicholas Hyett, equity analyst at Hargreaves Lansdown, said: ‘BP is still shelling out billions of dollars in compensation for the Deepwater Horizon disaster, the dividend remains substantial and is now accompanied by a share buyback programme, while an ever growing debt pile will need repaying at some point.
‘CEO Bob Dudley also has to contend with the monkey on the back of all oil companies – replacing the oil he pumped this quarter. The $4bn of capital spending needed over the last three months is a cost that must be met.
‘However, improving conditions, declining Gulf of Mexico costs, and some dramatic increases in Upstream production mean the future looks brighter. Perhaps most importantly the dividend looks increasingly secure. If net debt goes into decline next quarter, then BP will be well and truly on the road to recovery.’