BP profits drop but beat expectations as weaker oil prices squeeze margins
BP saw profits sink in the first quarter of 2019, blaming weaker oil prices and squeezed margins, but the oil giant still managed to beat expectations.
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The figures
Underlying replacement cost (RC) profit for the three months to the end of March fell from $2.6bn (£2.01bn) in 2018 to $2.4bn this year.
“The result reflected the weaker price and margin environment at the start of the quarter, partially offset by strong supply and trading results,” BP said.
Net RC profit slipped to $2.1bn from $2.4bn in the same period of 2018.
Operating cash flow stood at $5.9bn, excluding a $600m payment for its Deepwater Horizon oil spill in the Gulf of Mexico in 2010, and a $1bn working capital build.
Earnings per share dropped from almost $0.12 in 2018 to just over $0.10 so far this year, though BP raised its dividend 2.5 per cent to $0.1025.
Why it’s interesting
BP’s 7.7 per cent profit slump widens to an almost 30 per cent gap compared to its fourth quarter takings in 2018, when it earned $3.5bn, boosted by stronger oil prices.
However, it still beat forecasts of $2.3bn, according to a Reuters survey of analyst predictions.
The oil giant was helped by stronger oil and gas trading, with production averaging 3.8m barrels per day as reliability edged two per cent higher than this time last year.
Meanwhile the company continued to integrate onshore US assets from BHP Billiton, which it bought for $10.5bn late last year.
Another three major upstream projects are now underway in Trinidad, Egypt and the Gulf of Mexico, BP added.
It told investors that second quarter oil production should be broadly flat with its first quarter – while it plans to ramp up major projects, “seasonal turnaround and maintenance” will hamper its high margin areas.
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What BP said
Chief executive Bob Dudley said: “BP's performance this quarter demonstrates the strength of our strategy. With solid Upstream and Downstream delivery and strong trading results, we produced resilient earnings and cash flow through a volatile period that began with weak market conditions and included significant turnarounds.
“Moving through the year, we will keep our focus on disciplined growth, with efficient project execution and safe and reliable operations.”