BP profits gush as oil energises sector

BP's net profit rocketed to US$2.8 billion in the three months to the end of June. — Reuters pic
BP's net profit rocketed to US$2.8 billion in the three months to the end of June. — Reuters pic

LONDON, July 31 — Britain’s BP today became the latest global energy major to win an earnings boost from runaway oil prices, rounding off an impressive earnings season for the industry’s big hitters.

BP said net profit rocketed to US$2.8 billion (RM11.4 billion) in the three months to the end of June — and hiked its dividend for the first time in four years.

The company’s performance compared with slender profit of US$144 million in the same part of 2017 when it was hit by asset writedowns and large tax payments. Revenues meanwhile spiked by more than a third to US$75.4 billion.

The news came just days after BP — flush with cash from the soaring oil market — purchased US shale oil and gas operations from the world’s biggest miner BHP Billiton for US$10.5 billion in what it has called a transformational deal.

Strategic investment

“There is no doubt that higher oil prices have not only contributed to BP’s profit — but they have enabled the company to look for strategic investment (with) BHP Billiton,” ThinkMarkets analyst Naeem Aslam told AFP.

“There was no chance for BP to produce this kind of revenue and profit numbers or even to look for acquisitions if oil prices were still around US$30 per barrel.”

At the same time, BP snapped up Britain’s largest electric vehicle charging firm Chargemaster in June for an undisclosed amount, as it bets on booming green demand in the coming decades.

“We continue to make steady progress against our strategy and plans, delivering another quarter of strong operational and financial performance,” said chief executive Bob Dudley in the statement.

“We brought two more major projects online, high-graded our portfolio through acquisitions such as BHP’s US onshore assets and invested in a low-carbon future with the creation of BP Chargemaster.

“Given this momentum and the strength of our financial frame, we are increasing our dividend for the first time in almost four years.

“This reflects not just our commitment to growing distributions to shareholders but our confidence in the future.”

BP follows in the footsteps of broadly upbeat Q2 earnings from Anglo-Dutch rival Royal Dutch Shell, Repsol of Spain, Total of France, and US titans Chevron and ExxonMobil.

Oil price surge

Rising oil prices translate into rising revenues and profits for energy majors and producer nations.

The market has surged on the back of a December 2016 deal between the Organisation of the Petroleum Exporting Countries (Opec) cartel and Russia to curb output.

The price of London Brent crude, the main global oil benchmark, has jumped some 50 per cent over the last twelve months to the current level of about US$74 per barrel.

Opec and Russia, fearing an out-of-control spike in prices, reached a new deal in June to open the taps.

The buoyant market has nevertheless fizzed higher on output disruptions in oil producers like Iran, Libya and Venezuela.

Meanwhile today, BP took another US$700 million hit for the second quarter in financial costs linked to a deadly explosion on a BP-leased drilling rig in 2010 that unleashed the worst environmental disaster in US history. That took its total bill for the catastrophe to almost US$67 billion. — AFP

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