BP reports third-quarter earnings, production increase

Oct. 31, 2017
BP PLC reported an underlying replacement cost profit attributable to shareholders for the third quarter of $1.865 billion, up from $684 million in the second quarter and $933 in third-quarter 2016.

BP PLC reported an underlying replacement cost profit attributable to shareholders for the third quarter of $1.865 billion, up from $684 million in the second quarter and $933 in third-quarter 2016.

The supermajor’s third-quarter operating cash flow, excluding payments for the 2010 Macondo oil spill, was $6.6 billion. Including these payments, its operating cash flow for the quarter was $6 billion.

BP’s underlying operating cash flow in first 9 months exceeded organic capital expenditure plus full dividend, equivalent to organic cash balance including full dividend at a Brent crude oil price of $49/bbl, or $42/bbl including cash dividend only.

The firm’s upstream replacement cost profit before interest and tax for the third quarter was $1.242 billion, compared with a profit of $1.196 billion a year earlier.

Production for the quarter was 2.462 million boe/d, up 16.3% from third-quarter 2016. Underlying production for the quarter increased 10.9% due to the ramp-up of major projects.

Three upstream major projects—Persephone in Australia, Juniper in Trinidad and Tobago, and first phase of the Khazzan tight gas development in Oman—all started production in the quarter. Six of the seven major projects BP expects to start production in 2017 are now online. The seventh, Zohr in Egypt, is on track to start up before yearend.

Upstream unit production costs for the first 9 months of the year were 16% lower than the prior year, benefiting from production growth and continued focus on cost discipline, BP said.

“Looking ahead, we expect fourth-quarter reported production to be higher than the third quarter reflecting the continued ramp-up of major projects and recovery from seasonal turnaround and maintenance activities,” the firm said.

BP’s downstream replacement cost profit before interest and tax for the third quarter was $2.175 billion, compared with $978 million in third-quarter 2016.

The firm reported double-digit earnings growth from fuels marketing during the first 9 months. Premium fuel sales volumes have continued to grow and BP’s convenience partnership model has been rolled out to more than 170 retail sites worldwide so far this year.

“While industry refining margins have remained robust coming into the fourth quarter, we would expect a normal seasonal decline compared with the third quarter,” BP said. “In the fourth quarter, we also expect a higher level of turnaround activity.”