BP trebled profits in the third quarter of this year compared to 2016 thanks – in part – to increasing oil and gas production by 14%.
The underlying replacement cost profit (excluding Gulf of Mexico oil spill payments arising from the Deepwater Horizon fatal blow-out) for the third quarter was $1.9 billion, compared with $684 million in the same period last year.
Underlying operating cash flow in first nine months of 2017 exceeded organic capital expenditure plus full dividend – equivalent to organic cash balance including full dividend at Brent oil price of $49 a barrel, or $42 a barrel including cash dividend only.
Group oil and gas production in the third quarter averaged 3.6 million barrels of oil equivalent a day, 14% higher than in the third quarter of 2016.
Bob Dudley, BP chief executive, commented: “This quarter, three new Upstream projects and the highest Downstream earnings in five years -underpinned by reliable operations and disciplined spending – have generated healthy earnings and cash flow. “
Brian Gilvary, BP finance director, added: “The oil price recovered a little through this quarter – but not that much. It averaged about $52 a barrel over the three months, up just over $2 a barrel from the previous quarter, so that has helped.
“But, most of the gains have been about the business: having the right kit on stream when we need it led to strong underlying performance in both the Upstream and the Downstream. We’ve also seen the benefits of prioritising efficiency and costs over the last two years, as we’ve adjusted to this low oil price environment.
“We generated $6.6 billion of underlying operating cash in the third quarter and for the first nine months of 2017, we now have surplus cash on the organic frame.
“We still have Deepwater Horizon liabilities to deal with, but given that we are in a surplus cash position for this year and we’re now confident that we can balance the books just below $50 per barrel for 2018.
“We’ve also started the process of buying back shares to offset the scrip dividend dilution. These are shares that have been issued in place of cash as part of the dividend payment.
“This is a pretty strong signal to the marketplace in terms of confidence in our future cash flow.”
1 Nov 2017