Rising oil prices, output power BP profit to $6.2b

Oil major says years of spending cuts yield fruit as it shakes off $65b bill for 2010 Deepwater spill

BP’s profits more than doubled in 2017 to $6.2 billion (Dh22.7 billion) powered by higher prices and output of oil and gas, allowing the company to resume share buy-backs as it recovers from a three-year downturn.

The company will be able to generate profits in 2018 at an oil price of $50 a barrel, chief financial officer Brian Gilvary told Reuters, as years of spending cuts kicked in and as it slowly shakes off a $65 billion bill for penalties and clean up costs of the deadly 2010 Deepwater Horizon spill.

The London-listed company was the first among its European peers to resume share buybacks in the fourth quarter of 2017 after years of resorting to dilutive austerity measures in the face of the industry slump.

With a 20 per cent bounce in oil prices in the last quarter of 2017 to $61 a barrel, BP had a surplus of cash that allowed it to buy $343 million worth of shares in the fourth quarter, offsetting the scrip dilution.

BP shares were trading 1.4 per cent lower at 0824 GMT, compared with a 2.3 per cent decline for the sector.

“2017 was one of the strongest years in BP’s recent history,” chief executive officer Bob Dudley said in a statement.

“We enter the second year of our five-year plan with real momentum, increasingly confident that we can continue to deliver growth.”

BP also took a one-off charge of $900 million to adjust to new US tax rules, though it expects a long-term boost from the lowered corporate tax rates.

The company reported a $2.1 billion fourth-quarter underlying replacement cost profit, its definition of net income, topping forecasts for $1.9 billion, a companyprovided survey of analysts showed. That marked a jump from $400 million a year earlier and topped a third-quarter profit of $1.9 billion.

Full-year production rose 12 per cent to 2.47 million barrels per day (bpd) after BP launched seven new oil and gasfields in 2017, a record year.

It is set to inaugurate five additional projects this year including in Egypt, Azerbaijan and the UK North Sea.