October 19, 2018 / 6:38 AM / 6 months ago

Aker BP beats third-quarter profit forecasts, trims spending

OSLO (Reuters) - Norway’s Aker BP (AKERBP.OL) beat third-quarter operating profit forecasts on Friday, helped by higher oil prices, and trimmed its plans for capital and exploration spending, boosting hopes for a dividend increase.

Earnings before interest and taxes (EBIT) rose to $548 million from $219 million and topped the $521 million expected by analysts in a Reuters poll.

Quarterly revenue hit a record $1 billion, as the company’s realised oil price rose to $78 from $55 a barrel a year earlier.

Meanwhile, Aker BP said it now expected $1.25 billion in 2018 capital spending, down from a target of $1.3 billion, as projects under development were progressing smoothly.

It also trimmed its exploration budget to $400 million from $425 million due to the expected postponement of one well into 2019.

On the downside, the company said it now expected its annual production for 2018 to in the “lower half” of its guidance of 155,000-160,000 barrels of oil equivalents per day (boed).

Production in the third-quarter was 14 percent up year-on-year at 150,600 boed, but slipped 4.6 percent from the previous quarter due to maintenance, the company said on Oct. 5.

Chief Executive Karl Johnny Hersvik had told Reuters in September he expected output to top 200,000 boed by end-2019 after Norway’s giant Johan Sverdrup oilfield starts up.

Aker BP has an 11.6 percent stake in the Equinor-operated (EQNR.OL) North Sea project, which was 93 percent complete by the end of the third quarter, the company said.

Aker BP will pay a dividend of $0.3124 per share for the third quarter, in line with expectations and unchanged from the second quarter.

Sparebank 1 Markets upgraded its recommendation on Oslo-listed Aker BP to “buy” from “neutral”, repeating a target price of 345 crowns per share.

“Due to strong cash flow over the next few years, we estimate that the company may almost double its dividend and still be cash flow neutral,” Sparebank 1 Markets analyst Teodor Sveen-Nilsen said in a note.

“We believe increased dividend and/or share buy backs may be on the agenda over the next few quarters,” he added.

When asked about a potential dividend increase, Hersvik had said he considered the current dividend policy to be a “floor”.

The current plan is to increase payouts to shareholders by $100 million each year until 2021.

Norwegian billionaire Kjell Inge Roekke holds 40 percent of Aker BP via the investment firm Aker ASA (AKER.OL) while London-listed oil major BP (BP.L) has a 30 percent stake.

Aker BP shares were up 1.4 percent by 1038 GMT, while the overall European oil and gas index .SXEP was up 0.5 percent.

Reporting by Nerijus Adomaitis; editing by Ole Petter Skonnord and Kevin Liffey

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