BP said on Tuesday its profit tripled in the first quarter thanks to the award of a stake in Abu Dhabi’s major onshore concession (Adco), as well as improved oil prices.
The London-based oil company, which is now 2 per cent owned by the Abu Dhabi government, in the deal for the 10 per cent stake in Adco, beat the average estimate for its earnings by about 15 per cent, with earnings for the first three months of the year coming in at US$1.5 billion after tax and adjusting for inventory changes and one-off items.
That was triple the “underlying replacement cost” profit from last year’s first quarter, which was $532 million. The actual pre-tax profit for the first quarter, which includes charges for a drop in value of some of assets, as well as charges related to its 2010 Gulf of Mexico disaster, was just above $1.4bn compared to a $583m loss in last year’s first quarter.
“There has been an immediate positive impact from the renewal of the Adco onshore concession in Abu Dhabi, which has contributed to our highest upstream production figures for five years,” said Brian Gilvary, BP’s finance chief, in a statement accompanying the quarterly report.
BP reported that oil and gas production was 3.5 million barrels per day of oil equivalent (boepd), up 5 per cent on the first quarter of last year.
BP’s upstream underlying pre-tax replacement cost profit for the period was $1.4bn, which was a big turnaround from the $747m loss in last year’s first quarter. Downstream lost a little ground, with pre-tax replacement cost profit of $1.7bn, down from $1.8bn.
Mr Gilvary was cautious about the general outlook for oil and gas prices, but the company said its major projects were progressing ahead of schedule to meet its target of adding 800,000 boepd by 2020.
BP said it started up last month the first of seven major projects due to come onstream this year, an onshore compression unit in Trinidad & Tobago, where it is also nearly finished, and its $2bn offshore Juniper project is set to start producing up to 590m standard cubic feet of gas a day. The company also is developing the Taurus and Libra gasfields in Egypt’s Nile Delta, where it announced a new discovery during the quarter in the North Damietta offshore concession.
While BP is ramping up a field in the UK North Sea sector, the Quad 204, it has been divesting assets there and says it expects to sell between $4.5bn and $5.5bn more of assets overall this year, which includes the recently announced divestment of its interest in the Secco petrochemical venture in China.
Capital spending was $3.5bn in the first quarter and is on track for the estimated $15bn-to-$17bn BP has targeted, which is down $8bn from 2013 as major projects roll off.
The company, which had taken cumulative charges for the Gulf of Mexico disaster of $63bn by the end of last year, said those charges were $2.3bn in the first quarter and expected to be about $5bn for the whole of the year, before falling to $2bn next year.
Analysts have been mixed in their outlooks for BP, partly on worries about its ability to hold down costs and maintain dividend payments.
But the company said it would maintain a 10 cents per share dividend payment. Its shares rose sharply early but settled back for gain of just under 6 per cent, at around 448 pence in early London trading.
amcauley@thenational.ae
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