Published: Wed, May 02, 2018
Finance | By Jaime Brady

BP profits surge by 71 percent in Q1

BP profits surge by 71 percent in Q1

The company said Tuesday its replacement cost profit - a number analogous to the net income that US oil companies report - was $2.4 billion in the first quarter, compared with $1.4 billion in the same period a year earlier.

The company has also demonstrated that despite the general wariness in the industry, the supermajors are investing in new production: in the last quarter, BP made a final investment decision on four new projects-two in the United Kingdom portion of the North Sea, one in India, and one in Oman.

BP reported a net income of $2.6 billion, according to Reuters.

"Moving through 2018 were determined to keep delivering our operational targets and maintaining capital discipline while growing cash flow and returns".

"We have delivered another strong set of results" with rising output from major new projects, chief executive officer Bob Dudley said in a statement.

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".

Stripping out one-off costs, underlying profits rose to $2.6 billion, up 71 per cent from $1.5 billion in the same period a year earlier and significantly ahead of market expectations of $2.2 billion.

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In late morning deals, BP shares gained 1.0 percent to 543.40 pence on London's FTSE 100 index, which stood 0.3 percent higher at 7,532.06 points. It is still paying on it, and it will continue to pay for several more years, but as oil prices improve so has BP's outlook for the future.

Since the start of the year, BP has started production at the Atoll Phase One project in Egypt, the first of six expected start-ups this year.

The company's production rose 6% in the first quarter compared with a year ago.

BP's cash flow from operating activities rose sharply from a year earlier to $3.6 billion, but declined from the previous quarter as a result of the Deepwater Horizon payments and one-off charges.

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

Shareholder dividend stayed at 10 cents per share. The company paid out US$1.6 billion on a pretax basis related to Deepwater Horizon, including a final US$1.2 billion payment to the US Department of Justice.

It has so far cost the group more than 65 billion USA dollars (£48 billion), and although BP has all the major settlements now under its belt, it still has a few smaller legal bills to pay.

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