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BP first-quarter profit up 71% as production and oil price rise

02 May, 2018, 02:10 | Author: Kristi Dunn
  • BP's Efforts to Get Back Among Big Oil's Elite Start to Pay Off

BP's Chief Financial Officer Brian Gilvary said factors that reduced first-quarter cash flow - increases in working capital and payments related to the oil spill from the Macondo well in the Gulf of Mexico - would fade later in the year.

BP has reported a surge in profits for the first quarter of 2018.

BP said its upstream operations - which cover exploration and production - enjoyed the best quarter since the third quarter of 2014, with underlying profits more than doubling to 3.2 billion USA dollars (£2.3 billion). "Our safe and reliable operations and strong financial delivery have continued into 2018", said BP's chief executive.

Russ Mould, investment director at AJ Bell, said: "The main negative in the numbers is cash flow performance which was dampened by continuing payments linked to the 2010 Gulf of Mexico oil spill, leading to higher debt".

BP reported $2.6 billion in underlying replacement cost profit, its definition of net income, exceeding the $2.2 billion forecast by analysts in a company-provided survey.

"The market seems satisfied for now by assurances that this will represent the peak for outflows relating to the disaster, but if this is not in evidence later in the year, BP may be in for harsher treatment".

In late morning trading, BP shares in London were 0.8% higher at 542.4p.

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"The results definitely benefit from a higher oil price that we've seen come through", Gilvary noted.

The company then faces charges of about $2 billion next year, and then more than $1 billion a year out past 2030.

Shareholder dividend stayed at 10 cents per share.

BP launched seven oil and gas fields in 2017, a record year, and is set to inaugurate six more projects this year including in Egypt, Azerbaijan and Britain's North Sea, which will help it boost production by 800,000 barrels per day (bpd) by 2020, most of it gas.

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".

The bill included a final $1.2bn payment as part of a $20bn settlement with the US Department of Justice, but the giant still has a number of smaller legal bills to pay.

Net debt at the end of March stood at $40 billion, up from$37.8 billion at the end of 2017.

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