Published: Wed, May 02, 2018
Money | By Bruce West

BP share price outperforms as group's Q1 profits jump

BP share price outperforms as group's Q1 profits jump

Helping boost the bottom line was BP's upstream business which posted an underlying recurring cost profit, before interest and tax, of almost $3.2 billion, up from less than $1.4 billion over the first quarter of 2017.

"Higher output and stronger oil prices were behind the strong results", he added. It also reported rising production, helping it post its strongest quarterly earnings since the middle of 2014.

BP says first-quarter earnings surged 70 percent as the energy company profited from rising oil prices and increased production.

BP has had a tougher going than its peers because of the multibillion-dollar bill it was saddled with after the Deepwater Horizon explosion in 2010 and the resulting massive oil spill in the Gulf of Mexico.

BP has chosen to return part of the windfall to investors by buying back stock issued in lieu of dividends during the downturn, spending $120 million repurchasing 18 million shares in the first quarter. Dudley has cut costs and sold assets and BP has benefited from a partial recovery in the price of oil, which plunged from $110 a barrel in 2014 to less than $30 in early 2016 but has since rallied to more than $74 a barrel.

Then-Chief Executive Tony Hayward resigned the following month, and BP started what would turn out to be a multiyear, multibillion-dollar effort to recover. Global crude is now trading near $75 a barrel.

The spill payment in the first quarter was "US$500 million more than I expected", although that probably means that the burden will be lower later this year, said Redburn analyst Rob West. "Cash flow was good but messy, with less cash tax paid than expected".

Chief Financial Officer Brian Gilvary said the London-listed company might consider raising the dividend later this year if oil prices remain near current levels and debt declines. That included the final installment from a settlement with the Justice Department to resolve all criminal claims.

BP reported lower than expected cash flow for the first quarter of the year, disappointing investors despite the fact that the figure was 22 percent higher than in Q1 2017, at US$5.4 billion, excluding payments related to the Deepwater Horizon disaster. In total, payments are expected to total just over $3 billion in 2018.

"Underlying profit was up 23% on the previous quarter and was our best quarterly result in three years".

Like this: