BP returns to black but continues to battle fallout of Deepwater Horizon

● Energy giant swings to £1.2bn first-half profit as it adjusts to oil price backdrop

North Sea operator BP has cheered a strong half year as it moved back into the black despite taking a hefty hit after exiting a project in Angola.

The oil major recorded halfyear profits of $1.6 billion (£1.2bn), climbing back from a $2bn loss for the same period of 2016. However, the firm saw profits slip to $144 million in the second quarter, down from $1.4bn for the first three months of the year and driven by a $753m charge linked to the company’s decision to call time on a number of exploration assets in Angola.

Group chief executive Bob Dudley said: “We continue to position BP for the new oil price environment, with a continued tight focus on costs, efficiency and discipline in capital spending.

“We delivered strong opera- tional performance in the first half of 2017 and have considerable strategic momentum coming into the rest of the year and 2018, with rising production from our new upstream projects and marketing growth in the downstream.”

BP said three new upstream projects came online this year, while two gas endeavours in India and Trinidad have also been sanctioned. Upstream pre-tax profits rose to $2.1bn for the first half of the year, up from a $718m loss in 2016.

In downstream, which comprises refining and petrol stations, pre-tax profits eased back slightly to $3.27bn after reaching $3.28bn in 2016.

It follows on from a healthy second-quarter performance for rival Royal Dutch Shell, which reported a large rise in profits boosted by higher oil and gas prices.

Furthermore, the price of oil has risen back above the $50 mark to around $52 a barrel in recent weeks, despite traders questioning the ability of Opec-led production cuts to tackle the global supply glut.

Nicholas Hyett, equity analyst at Hargreaves Lansdown, said: “Were it not for the Deepwater Horizon oil spill more than seven years ago, BP would be in pretty good shape right now.

“As it is, the Gulf of Mexico payments, which had a negative cash impact of around $2bn this quarter, continue to weigh on the group and are forcing it to take on an ever larger debt burden.

“Fortunately the group’s Upstream division has delivered a strong set of numbers this time out, and while the Downstream refining business hasn’t delivered the growth we’ve seen from the likes of Shell, it remains robustly profitable.

“Gulf of Mexico costs are expected to fall from here, but BP remains a bit of a waiting game.”