BP earnings double on larger oil value

BP (LON:BP) announced Tuesday an increase in underlying profits by 139 percent to $6.2 billion in 2017, marking the biggest year since the Deepwater Horizon accident.

BP was the first among its European peers to resume share buybacks in the fourth quarter of 2017 after years of dilutive austerity measures in the face of the industry slump.

BP is "operating and firing on all cylinders", CEO Bob Dudley says after the company reports better than expected Q4 earnings and revenues.

"The full-year underlying result was more than double a year earlier, our organic cash flows are back in balance and our financial frame remains resilient".

While BP also fell victim to an under-performing refining business and booked another $1.7 billion charge related to the Macondo oil spill, the rapid rebound in its production was a bright spot.

BP are in the second year of a five-year plan
GETTY BP are in the second year of a five-year plan

Shares in BP were down 0.9% on Tuesday at a price of 477.50 pence each.

BP was added about 1-billion of barrels of oil equivalent to its reserves in 2017, the largest since 2004, thanks to six discoveries, including in Senegal and the North Sea.

Oil and gas output rose following the startup of seven new projects last year, helping the London-based giant post a fivefold increase in fourth-quarter profit from a year earlier to the highest since the start of 2015. In total, BP has now paid more than $65bn (£46.5bn) in fines and compensation to businesses. It does expect long-term earnings to benefit from the reduction in U.S. federal corporate tax to 21% from 35%. The FTSE 100 group made $6.2bn ($4.4bn), up from $2.6bn made during the previous 12 months.

Gearing, the ratio between debt and BP's market value, rose to 27.4% at the end of 2017 from 26.8% at the end of September.

CFO Brian Gilvary thinks crude oil prices are "ahead of where we expected them to be" and sees Brent correcting to $50-$55/bbl by year-end, which will keep a tight rein on BP's spending, with this year's capital budget capped at $15B-$16B vs. $16.5B last year.

  • Eleanor Harrison