British energy giant also boosted by rising levels of oil and gas production

This article is more than 2 years old

This article is more than 2 years old

BP’s profits jumped 71% during the first three months of the year, in the latest sign that the British oil company is back on the path to growth.

The continued increase in crude and gas prices combined with a 6% rise in production to push profit up to $2.6bn (£1.9bn), the firm’s highest since 2014.

Bob Dudley, the BP chief executive, said the company had delivered a strong set of results. Its share price rose to the highest level since 2010.

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While the growth in earnings was greater than its European peers, BP’s profit was still lower than the Anglo-Dutch company Shell’s $5.32bn and the French group Total’s $2.9bn.

Cash flow was nearly $1bn below what analysts had expected, at $5.4bn.

BP also had a $1.6bn compensation bill for the Deepwater Horizon disaster, on top of the $65bn it has already paid out since the 2010 oil spill.

Brian Gilvary, the BP chief financial officer, said the company had a “pretty strong handle” on what future payments looked like, as it begins to move on from the incident’s financial burden.

The company expects to pay out just over $3bn this year, including the $1.6bn, followed by about $2bn in 2019 and then about $1bn a year until 2032.

“I think we’re getting more confidence around what that looks like [future payments]. The only uncertainty left now is 300 claims left to resolve,” said Gilvary.



While oil and gas production will dip in the second quarter because of maintenance and BP missing out on renewing its operations in Abu Dhabi, production for 2018 is expected to be up on last year.

Gilvary said this would be driven by momentum from 2017 projects ramping up, as well as six new projects starting this year.

He also hinted that investors could be rewarded by an increase in dividends in the second half of the year, saying the board would be talking about what conditions could see “a move on the dividend”.

Dudley said 2018 would see BP “determined to keep delivering our operational targets and maintaining capital discipline while growing cash flow and returns”.

Nicholas Hyett, an analyst at Hargreaves Lansdown, said that if the company’s net debt went down in the next quarter from its current level of $40bn, “BP will be well and truly on the road to recovery”.

The company is the latest oil major to benefit from a bullish oil price, which has climbed from about $67 a barrel at the start of the year to nearly $75. Brent crude averaged $67 a barrel in the first quarter, compared with $61 in the final quarter of 2017.

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The price of oil has been pushed up by Saudi and Russian-led production curbs, which have brought global supply and demand closer into balance.



Geopolitical instability, including the prospect of Donald Trump not renewing the Iran nuclear deal later this month, has also been a driver.

If the US president fails to renew the agreement, experts said Iranian oil exports could fall by about 1m barrels a day, pushing up crude prices significantly.

“If that happened, Brent prices could jump to near $90,” said Tomomichi Akuta, a senior economist at Mitsubishi UFJ Research and Consulting in Tokyo.

Gilvary said the oil price was a “bit frothy” and would be influenced this year by Opec, US shale growth and global demand.



However, he said: “There remain significant uncertainties including geopolitical risks and the possibility of further guidance from Opec.”