BP disappoints City despite surge in profits

Jon Howard
February 7, 2018

BP announced in a statement today that its underlying replacement cost profit had soared to $6.2 billion for full year 2017 and $2.1 billion in the fourth quarter, from $2.6 billion and $400 million for full year and fourth quarter 2016, respectively.

BP on Tuesday reported fourth-quarter underlying replacement cost profit, the companys definition of net income, of $US2.1 billion, compared with a profit of $US400 million a year earlier and $US1.9 billion in the third quarter of 2017. Last week, the oil giant hadannounced that it hoped to double North Sea oil production to 200,000 barrels by 2020.

"2017 was one of the strongest years in BP's recent history", said chief executive Bob Dudley.

BP said production fuel volumes in Downstream for 2017 were 6% higher year-on-year, with fuels marketing earnings rising more than 10% in 2017 on the year before.

With a 20% 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 $343m worth of shares in the fourth quarter, offsetting the scrip dilution.

"We delivered operationally and financially, with very strong earnings in the downstream, upstream production up 12 percent, and our finances rebalanced". "We are entering the second year of our five-year plan with a real impetus, more and more confident that we can continue to grow", added he.

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BP has reported a surge in profits thanks to higher oil prices and increased production as it hailed its strongest year for exploration since 2004.

Looking further ahead, the company said in mid-January it would be expecting 2018 payments of around USD3.0 billion related to the oil spill and said that settlements would soon begin "winding down".

BP took a one-off charge of $900 million in the fourth quarter of 2017 to adjust to new US tax rules, though it expects a long-term boost from the corporate-friendly rates. Net debt fell to $37.8 billion at the end of the fourth quarter, down significantly from $39.8 billion in the preceding period.

Dividends remained unchanged at 10 cents per share.

There's no guarantee that the cost of the Deepwater Horizon disaster won't rise again, but it will be entirely manageable from cash flow this year and next, Chief Financial Officer Brian Gilvary said by phone.

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