BP profit surges on oil price recovery

BP reported second-quarter profit four times higher than a year earlier, boosted by higher oil prices, as the oil company increased its dividend for the first time since 2014.

Underlying replacement cost profit for the three months to the end of June surged to $2.8bn (£2.1bn) from $684m the year before. The result was higher than analysts’ average estimate of $2.7bn, according to Reuters.

BP increased its quarterly dividend 2.5% to 10.25 cents a share – the first rise since the third quarter of 2014.

The radical improvement in BP’s performance was driven by an increase in upstream profit to $3.5bn from $710m. The upstream business, which covers exploration and production, gained from an increase in the price of Brent crude to more than $75 a barrel at the end of the quarter from less than $55 a barrel a year earlier.

Downstream profit, including refining and chemicals, edged up to $1.46bn from $1.41bn. Profit from BP’s stake in Russia’s Rosneft tripled to $766m from $247m.

BP froze its dividend in 2014 as the oil price tumbled and failed to increase the payout as it cut costs to cope with the price rout and paid compensation for the 2010 Gulf of Mexico spill. However, the company’s prospects have improved and on 27 July it announced the dividend increase along with a share buyback of up to $6bn and the $10.5bn purchase of BHP Billiton’s US shale assets.

Bob Dudley, BP’s chief executive, said: “We continue to make steady progress against our strategy and plans, delivering another quarter of strong operational and financial performance. Given this momentum and the strength of our financial frame, we are increasing our dividend for the first time in almost four years.”

Oil and gas production rose 1.4% or 9.6% stripping out portfolio changes and pricing effects. BP said the increase was driven by new big projects and strong plant reliability.