Oil price recovery helps BP back to quarterly profit
The oil giant posted a loss in the same period last year amid a collapse in the price of crude but is now back in the black.
By John-Paul Ford Rojas, Business Reporter
An oil price recovery helped BP swing back into profit for the first quarter – but it warned that the market still faces uncertainty.
The FTSE 100-listed group – a mainstay of many UK pension funds – reported a replacement cost profit of $1.4bn (£1.1bn) for the January-March period, up from a loss of $485m (£377m) a year earlier.
It was helped by an uptick in the price of Brent crude as well as the impact of cost-cutting. Shares rose nearly 3%.
Oil firms have come under pressure after the cost of a barrel of Brent tumbled from more than $100 in 2014 to less than $30 last year though there has since been a recovery to more than $50.
That has been helped by an agreement by oil-producing countries to curb production in the face of oversupply and weak demand.
BP finance director Brian Gilvary said: "The oil price is always going to be a factor, but we are performing well."
He said improved earnings reflected a recovering oil price as well as a focus on cutting costs, which are down by $7bn a year compared with 2014. BP has been cutting thousands of jobs in the face of the tough market.
But Mr Gilvary added: "The environment is still uncertain."
He pointed to factors such as whether oil production cuts are extended and the level of US shale gas flowing into the market.
Chief executive Bob Dudley said: "Our year has started well. BP is focused on the disciplined delivery of our plans."
The group joined major rivals including Exxon Mobile, Chevron and Total in posting stronger than expected quarterly earnings.
BP also disclosed it had paid out $2.3bn in the period related to the deadly Deepwater Horizon blow-out in the Gulf of Mexico that continues to weigh on it, and is expected to make a total $4.5-$5.5bn in payments during 2017.
It has set aside a total of $62.7bn so far to cover costs since the disaster, adding a $161m charge during the first quarter.
In February, BP reported an annual loss of $999m for 2016.