BP BP Plc

--BP reported an underlying replacement cost profit of $2.81 billion, beating forecasts

--The company maintained its interim dividend at 10.25 cents a share

 
    By Sarah McFarlane and Oliver Griffin 
 

BP PLC's profit held steady in the second quarter with a rise in oil-and-gas production, and strong trading results that helped offset lower commodity prices, the company said Tuesday. The results exceeded peers who suffered a fall in profits for the period.

London-based BP said its replacement cost profit--a number comparable to the net income that U.S. oil companies report--was $1.78 billion in the second quarter, compared with the $1.79 billion reported for the same period a year earlier. Its underlying profits were similarly steady at $2.81 billion, which was higher than analysts expected. A company-compiled consensus of 20 analysts' estimates had forecast underlying replacement cost profit at $2.46 billion.

BP shares were up about 3% in early trading in London.

Production rose 4% to 3.8 million barrels of oil equivalent a day, but the company warned that output is likely to be lower in the third quarter as a result of maintenance activities and the impact of Hurricane Barry on operations in the U.S. Gulf of Mexico. The hurricane caused 14 days of production outages in July, Chief Financial Officer Brian Gilvary said.

The results help cement BP's recovery from the Gulf of Mexico oil spill in 2010 and the oil price collapse in 2014.

"After navigating rocky waters, BP is now plain sailing," said Bernstein analyst Oswald Clint.

Royal Dutch Shell PLC, Exxon Mobil Corp. and Chevron Corp. are all due to report results later this week.

Last week, French energy giant Total SA and Norway's Equinor ASA both announced declines in earnings for the second quarter, citing lower oil-and-gas prices. Brent oil prices averaged $69 a barrel for the quarter. While this is up from $63 a barrel the previous quarter, it was lower than the $74 a barrel for the same period a year ago. BP noted that European and Asian gas prices were around 40% lower than they were a year ago.

Underlying replacement cost profit before interest and tax in the company's upstream business--the part of BP that produces oil and gas--fell slightly to $3.41 billion, from $3.51 billion in the year-earlier period.

In the U.S., BP is the largest marketer of natural gas.

BP said its operating cash flow, excluding payments related to the 2010 Deepwater Horizon oil spill, came in at $8.2 billion, while net debt rose to $46.5 billion. The company paid $1.4 billion in connection to the oil spill in the Gulf of Mexico as part of its $20 billion settlement with the U.S. government struck in 2015. The settlement requires the company to make annual payments through to 2032.

BP says it is on track to reach its goal of selling $75 billion of assets by 2020. The company's short-term plan is to divest $10 billion of assets in 2019-2020. So far, it has sold assets worth around $1.5 billion. It is in talks to sell onshore U.S. gas assets but some deals are taking longer, Mr. Gilvary said.

The asset sales could also help boost future dividends.

"We'll still get $4 to $5 billion done this year and of course as we get those disposals away that will derisk the balance sheet and create space for looking at further distributions in the second half of this year," Mr. Gilvary said.

Write to Sarah McFarlane and Oliver Griffin at sarah.mcfarlane@wsj.com and oliver.griffin@dowjones.com

(END) Dow Jones Newswires

July 30, 2019 07:47 ET (11:47 GMT)

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