Published: Wed, May 02, 2018
Money | By Ethel Goodwin

BP Profits Surge as Output Grows, but Debt Rises

BP Profits Surge as Output Grows, but Debt Rises

BP's profit jumped 71% in the first three months of 2018 as the oil company's upstream business reported its strongest quarter for more than three years.

Tuesday's solid first-quarter results could go some way toward convincing investors that BP's ambitious plan to regain its position among the world's top energy companies is gaining steam.

BP said its upstream operations - which cover exploration and production - enjoyed the best quarter since the third quarter of 2014, with underlying profits more than doubling to $3.2bn (£2.3bn).

But the group continued to count the cost of its 2010 Deepwater Horizon tragedy in the Gulf of Mexico, with another $1.6bn (£1.2bn) forked out in the first quarter - including $1.2bn (£873m) for the final payment of its 2012 settlement with the Department of Justice.

"We have delivered another strong set of results", said Bob Dudley, BP chief executive.

BP's shares rose more than 1% in early London trading, after touching a high of GBP5.48, or about $7.50.

The London-based company reported net income of $2.47 billion, up from $1.45 billion in the same period past year. It is still paying on it, and it will continue to pay for several more years, but as oil prices improve so has BP's outlook for the future.

Continued Downstream earnings growth with strong refining availability in the US.

Shares in the oil giant briefly hit their highest level since 2010 as the firm said underlying replacement cost profits jumped to a better-than-expected 2.6 billion USA dollars (£1.9 billion) for the first three months of 2018, up from 1.5 billion United States dollars (£1.1 billion) a year earlier.

BP has chosen to return part of the higher earnings from the windfall to shareholders by buying back shares issued in lieu of dividends during the downturn, spending US$120 million buying 18 million shares in the first quarter.

BP produced 3.7 million barrels of oil equivalent daily in the first quarter, a 6-percent increase on the year, which also contributed to the robust financial results.

Chief financial officer Brian Gilvary cautioned that the performance was energised only partly by the oil price recovery.

Net debt at the end of March stood at $40 billion, up from$37.8 billion at the end of 2017. Payments are expected to be just over $3 billion in 2018, weighted to the first half of the year.

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