BP's profit surge 71% on higher oil prices and output

BP's profit surge 71% on higher oil prices and output

BP's profit surge 71% on higher oil prices and output

Underlying replacement cost profit - which excludes fluctuations in the value of crude oil inventories - surged 71 percent to $2.6 billion. It also reported rising production, helping it post its strongest quarterly earnings since the middle of 2014.

Bob Dudley, BP's chief executive, said: "We have delivered another strong set of results".

The oil giant reported profits of $2.6bn (£1.9bn) for the first quarter, up from $1.5bn in the same period a year ago, which "primarily reflects higher oil prices and a favourable foreign exchange impact". The disaster killed 11 and sent oil spewing into the Gulf, resulting in the worst offshore oil spill in USA history.

Tuesday's solid first-quarter results could go some way toward convincing investors that BP's ambitious plan to regain its position among the world's top energy companies is gaining steam.

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At the same time, the London-based company saw its debt pile rise following $1.6 billion in payments to settle remaining lawsuits following the deadly 2010 Deepwater Horizon spill in the Gulf of Mexico which has cost it more than $65 billion. The company's gearing, the ratio of net debt to equity, was 28 per cent, an increase from 27 per cent in the fourth quarter of 2017, BP said. Stripping those out, cash flow reached $7 billion in the quarter, the strongest since 2014. The company expects its capital-expenditure budget to fall into the lower end of its guidance this year, estimated at around $15 billion.

Profit before interest and tax at BP's upstream business, which covers exploration and production of oil and gas, rose to $3.2bn from $1.4bn as production increased and the oil price rose.

Oil prices have nevertheless shot above $70 a barrel from below $30 in early 2016. With rising output from our new major projects and excellent reliability, Upstream production was 9 per cent higher than a year earlier. "This should help improve confidence around BP's dividend". That included the final installment from a settlement with the Justice Department to resolve all criminal claims.

The company then faces charges of about $2 billion next year, and then more than $1 billion a year out past 2030. Underlying profit was up 23 per cent on the previous quarter and was our best quarterly result in three years. Payments are expected to be just over US$3 billion in 2018, weighted to the first half of the year.

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