BP BP Plc

Energy producer's quarterly profit soars; Deepwater disaster remains financial drag

By Sarah Kent 

This article is being republished as part of our daily reproduction of WSJ.com articles that also appeared in the U.S. print edition of The Wall Street Journal (August 1, 2018).

LONDON -- BP PLC on Tuesday said second-quarter profit jumped, as higher oil prices helped the company push its ambitious growth plans.

The London-based energy producer said its replacement cost profit -- a metric analogous to the net income that U.S. oil companies report -- tripled from last year's second quarter to $1.8 billion.

After years of cost-cutting and financial restructuring when crude prices slumped, BP and other big oil companies are benefiting from a recovery in the market. Oil prices are up more than 10% since the start of the year, leading to higher profit and cash flow for producers.

Brent crude prices averaged nearly $75 a barrel from April to June, compared with an average of roughly $50 a barrel in the same three months last year.

BP's production in the first half rose 3% from a year earlier, delivering on a strategy to return to its former size by the early 2020s.

"I can't remember when it has looked this good," BP Chief Executive Bob Dudley said.

Last week, the company announced a $10.5 billion deal to acquire some of the hottest assets in U.S. shale country. The acquisition marked BP's biggest in nearly 20 years and signaled the company's growing confidence. At the same time, it said it would increase its dividend for the second quarter by 2.5%.

BP is on track with its plan to restore growth following years of retrenchment in the wake of the Deepwater Horizon blowout in the Gulf of Mexico eight years ago.

Still, penalties related to the 2010 disaster remain a financial drag. BP's landmark $20 billion settlement with the U.S. government in 2015 requires the company to make annual payments of around $1 billion through the end of the next decade. Payments in 2018 are expected to total just over $3 billion after tax.

BP caps off a mixed earnings season for the world's biggest oil companies. The likes of Exxon Mobil Corp., Chevron Corp. and Royal Dutch Shell PLC all posted sharply higher profit, but for the most part failed to impress investors who had expected even bigger windfalls.

Write to Sarah Kent at sarah.kent@wsj.com

(END) Dow Jones Newswires

August 01, 2018 02:47 ET (06:47 GMT)

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