BP hitches a ride on recovery of oil price

Earnings: Oil major follows Shell with significant profits rise

Oil giant BP has cheered one of the strongest years in the company’s recent history after a hike in the cost of crude helped annual profits more than double.

The energy giant saw underlying replacement cost profit – BP’s preferred income measure – soar to £4.4 billion in 2017, up from £1.9bn the year before.

On a fourth-quarter basis, BP chalked up another rise at £1.5bn, climbing from £286.2 million over the same threemonth period in 2016.

BP is among a string of oil majors benefiting from climbing prices, having seen Brent crude hit $70 per barrel last month - its highest level in more than three years.

Group chief executive Bob Dudley said BP had capitalised on the improving market.

“Last year was one of the strongest in BP’s recent history,” Mr Dudley said.

“We delivered operationally and financially, with very strong earnings in the downstream, upstream production up 12 per cent, and our finances rebalanced.

“We enter the second year of our five-year plan with real momentum, increasingly confident we can continue to deliver growth across our business, improving cash flows and returns for shareholders out to 2021 and beyond.”

The group said its 2017 performance reflected the higher crude price and a £116.6m boost from an out-of-court settlement between Sistema, Sistema Invest and Rosneft subsidiary Bashneft.

BP, which joined Shell in beating analysts’ earning’s forecasts, also unveiled brighter overall profits for the year at £2.4bn, up from £82m in 2016.

However, the FTSE 100 firm posted a replacement cost loss for the fourth quarter at £417m, sinking from a £51.5m profit during 2016.

Payments linked to the Deepwater Horizon oil spill hit £214.6m in the fourth quarter, pushing the total bill for 2017 to £3.7bn.

BP, which has seen its share price recover broadly in line with global energy prices, said earnings from its downstream business unit were “very strong”, up 24% to £5bn on an underlying replacement cost profit basis.

It said oil and gas production was bolstered by seven major projects coming on line, helping upstream production lift 12% over the period.

Brian Gilvary, BP’s chief financial officer, said: “We had strong delivery and growth across BP in 2017.

“The full-year underlying result was more than double a year earlier, our organic cash flows are back in balance and our financial frame remains resilient.”

Shares in BP closed the session down 7.05 at 475.00 last night.

Last year was one of the strongest in BP’s recent history. BOB DUDLEY CHIEF EXECUTIVE BP

Picture: BP. An aerial view of how BP’s Culzean field in the Central North Sea will look once completed. Production is scheduled to begin next year.