Business: BP posts first quarter profits of US$1.45 billion

Tuesday, May 2, 2017 - 09:45

British oil giant BP rebounded back into net profit in the first quarter, energised by deep cost-cutting and rising crude prices, the group revealed on Tuesday (May 2).

Earnings after taxation stood at US$1.45 billion (€1.33 billion) in the first three months of 2017, which contrasted with a net loss of US$583 million during the first quarter of 2016.

Benchmark oil contract Brent North Sea crude averaged US$54.61 in the first quarter, up 55 per cent year-on-year.

Energy producers across the world have reaped the benefits of higher oil prices so far this year, because they translate into rising revenues and higher profits.

Prices have been boosted in recent months as the OPEC oil producers' cartel has adhered to a production cut agreed late last year.

US giants ExxonMobil and Chevron, as well as French titan Total, all posted bumper profits last week.

"Our year has started well. BP is focused on the disciplined delivery of our plans," said BP chief executive Bob Dudley in Tuesday's results statement. "First-quarter earnings and cash flow were robust. We have shown continued operational momentum."

Replacement cost profit, which strips out exceptional items and changes in the value of oil inventories, rose to US$1.51 billion from US$532 million.

That easily beat market expectations of US$1.21 billion, according to analysts polled by Bloomberg.

In reaction to the results, BP's share price rose as much as three per cent in early deals. It later pared gains to stand 1.5 per cent higher in mid-morning trade on London's FTSE 100 index, which rose half a per cent in value.

"A healthier oil price environment, increasing production in the upstream division, and improved refining margins in downstream, helped BP beat analyst expectations in the first quarter," noted analyst Nicholas Hyett at stockbroker Hargreaves Lansdown.

The downstream business includes refining, marketing and distribution, while upstream comprises exploration and production.

Despite a first quarter loss in 2016, BP managed an overall annual net profit on the back of cost-cutting - and lower charges linked to the Gulf of Mexico oil spill disaster.

In 2015, BP had posted the company's biggest loss in at least 20 years, ravaged by Gulf of Mexico spill costs and tumbling oil prices - which caused the group to axe jobs and cut investments.

A deadly explosion on a BP-leased drilling rig, the Deepwater Horizon, unleashed the worst environmental disaster in US history in 2010.