New output, trading lift BP profits above forecast
LONDON (Reuters) - BP Plc profits beat analyst expectations by almost $1 billion (644 million pounds) in the first quarter, helped by two new oilfields 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 $4.22 billion (2.72 billion pounds) for the quarter.
That was down from $4.65 billion a year ago mainly due to asset sales, but it beat analysts' forecasts of around $3.27 billion and the company's shares climbed 2.3 percent to 467.5 pence in early Tuesday trade, their highest since late January.
"It's a very good number. They beat consensus materially. The way I look at it I strip out what I think are non-recurring things like trading gains, positive consolidation," said Societe Generale analyst Irene Himona. "Even if you strip all that out you find that the adjusted profit in Q1 was still about 7 percent ahead of consensus, so clearly a strong operational performance that's very encouraging."
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. Trading of oil and gas is not separated out in BP's figures, with oil trading buried in a refining and marketing result that was twice as strong as a year ago, and gas trading hidden within the upstream oil and gas production section which was down slightly.
The lower overall profit versus a year ago tracks 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, although the scale of BP's earnings surprise is bigger.
BP's chief executive Bob Dudley, who has been under pressure from investors to deliver a turnaround for the company, said the completion of a $38 billion post-spill divestment programme along with the revamp of its Russian activities which was completed ahead of deadline earlier this year and produced an $8 billion share buyback, were steps in that direction.
"We have really simplified and focused down the portfolio," he said in a company video. We've got a lot still to do this year but it's off to a good start."
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