Published: Wed, May 02, 2018
Money | By Hannah Jacobs

BP share price outperforms as group's Q1 profits jump

BP share price outperforms as group's Q1 profits jump

Though BP has worked through almost all of the 390,000 legal claims stemming from the 2010 explosion, the bill for its remaining claims unexpectedly jumped late past year. 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.

First-quarter results in the sector have been a mixed bag, with Royal Dutch Shell and Exxon Mobil falling short of forecasts, while results from Chevron and Total were stronger than expected.

"We have delivered another strong set of results", BP's chief executive Bob Dudley commented in the statement.

BP shares were 0.9 percent higher at 0930 GMT, compared with a 0.2 percent gain in the European oil and gas index.

Around US$120mln was spent on share buybacks, and the oiler maintained its first-quarter dividend at 10 cents per share.

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.

Underlying replacement cost profit, a key measure used by analysts to assess BP's profitability, came in ahead of expectations at $2.6bn, but investors could be spooked by a rise in debt from $38.6bn to $40bn.

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 $3.2bn (£2.3bn). Brent crude is now trading around $75 a barrel.

First Upstream major project of 2018, Atoll in Egypt, started production; to date in 2018, final investment decisions have been taken on four new projects – in Oman, India and two in the UK North Sea.

BP's energy production increased 9 percent to the equivalent of 2.6 million barrels of oil a day.

Chief financial officer Brian Gilvary cautioned that the performance was energised only partly by the oil price recovery.

BP's gearing, the ratio between debt and BP's market value, stood at 28.1 percent at the end of the quarter, up from 27.4 percent at the end of 2017.

The further hit from the spill in the first quarter sent the firm's debt levels rising to 40 billion United States dollars (£29 billion) from 38.6 billion U.S. dollars (£28.2 billion) a year ago.

The results were impacted by a $1.6 billion pre-tax payment for the settlement of the Deepwater Horizon spill.

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