New output, trading lift BP profits
BP profits outperformed expectations by almost US$1 billion in the first quarter thanks in part to the high margin nature of new production that came on stream at the end of last year and a strong performance from its trading division.
The British oil company - still fighting multi-billion dollar lawsuits over its Gulf of Mexico oil spill of three years ago - turned in underlying replacement cost net profit of US$4.215 billion (HK$32.72 billion) for the quarter.
That was down from US$4.65 billion (HK$36.1 billion) a year ago mainly due to asset sales, but beating analysts expectations of around US$3.27 billion (HK$25.38 billion).
BP has been flagging for some time that its new production might deliver better profitability. The quarter included a full three months of production from its Skarv field in the North Sea and from its PSVM facility in Angola which both started producing at the end of last year.
Lower unplanned downtime in the refining part of the business and lower costs also contributed to the earnings surprise.
The lower earnings versus a year ago track the group’s shrinking earning power after the sale of its holding in Russian venture TNK-BP, and the disposal of other producing assets to pay its oil spill liabilities.
Ten days of earnings from its newly acquired stake in Russia’s top oil firm Rosneft and the profitable extra output failed to make up the difference.
BP’s rivals Exxon Mobil and Chevron also reported better than expected first quarter profits last week.