BP profit beats estimates even as oil-spill burden lifts debt

BP profits fly up 71 per cent as company releases best results in three years

BP profits fly up 71 per cent as company releases best results in three years

Group chief executive at BP Bob Dudley - who saw a two-year row over his pay come to an end in March - praised "another strong set of results".

The company said Tuesday its replacement cost profit - a number analogous to the net income that USA oil companies report - was $2.4 billion in the first quarter, compared with $1.4 billion in the same period a year earlier.

Shareholders react positively to the highest profit in years even as the continuing burden of oil-spill payments push debt higher.

Underlying replacement cost profit for the first quarter of 2017 totaled $1.5 billion.

In late morning trading, BP shares in London were 0.8% higher at 542.4p.

The company then faces charges of about $2 billion next year, and then more than $1 billion a year out past 2030.

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Operating cash flow excluding Gulf of Mexico oil spill payments* in the quarter was $5.4 billion including a $1.8 billion negative impact from an increase in working capital ($1.7 billion after adjusting for inventory holding gains) driven by higher oil prices and seasonal inventory builds. Part of that effort has been a plan to return its oil-and-gas production to 4 million barrels a day, while boosting profits and cash flow.

Underlying profits were also up, with BP posting an underlying recurring cost profit of almost $2.6 billion, up from $1.5 billion a year earlier.

It paid out some US$1.6bn in payments connected to the Gulf of Mexico oil spill, including the US$1.2bn final payment relating to the 2012 settlement with the US Department of Justice. "This should help improve confidence around BP's dividend". Payments are expected to be just over $3 billion in 2018, weighted to the first half of the year.

Profit before interest and tax at BP's upstream business, which covers exploration and production of oil and gas, rose to $3.2bn from $1.4bn as production increased and the oil price rose.

BP's solid first-quarter. Royal Dutch Shell Plc generated less cash than analysts forecast in the first quarter and its shares were hammered after Chief Financial Officer Jessica Uhl said the company wasn't yet ready to commence a $25 billion stock-repurchase program. Gilvary also raised the prospect of increasing dividends.

At the same time, Dudley has pledged to keep a tight rein on spending and costs. It was also about a billion dollars lower than analysts' expectations.

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