BP first-quarter profit beats forecasts as production and oil price rise

Underlying replacement cost profit for the three months to the end of March rose 71% to $2.6bn (£1.9bn) from $1.5bn a year earlier. On average analysts had expected profit of $2.2bn.

Profit before interest and tax at BP’s upstream business, which covers exploration and production of oil and gas, rose to $3.2bn from $1.4bn as production increased and the oil price rose. The upstream result was BP’s best since the third quarter of 2014.

Bob Dudley, BP’s chief executive, said: “We have delivered another strong set of results. Our safe and reliable operations and strong financial delivery have continued into 2018. With rising output from our new major projects and excellent reliability, Upstream production was 9% higher than a year earlier.

"Moving through 2018 we're determined to keep delivering our operational targets and maintaining capital discipline while growing cash flow and returns.”

The company's shares rose 1.6% to 545.40p at 11:50 GMT.

BP has emerged from a gruelling stretch that started with the 2010 Gulf of Mexico oil spill, which has cost it more than $60bn, and continued after the oil price collapsed in 2014. Dudley has cut costs and sold assets and BP has benefited from a partial recovery in the price of oil, which plunged from $110 a barrel in 2014 to less than $30 in early 2016 but has since rallied to more than $74 a barrel.

Profit before interest and tax from downstream activity such as chemicals and refining was little changed at $1.713bn from $1.706bn. BP paid out $1.6bn for the Gulf of Mexico spill in the quarter.

Operating cash flow excluding Gulf of Mexico payments increased by $1bn from a year earlier to $5.4bn as oil prices rose. Net debt rose to $40bn from $38.6bn a year earlier.

Nicholas Hyett, equity analyst at Hargreaves Lansdown, said increased cash flow was encouraging but that BP still faced stern demands including capital spending, rising debt and share buybacks.

"However, improving conditions, declining Gulf of Mexico costs, and some dramatic increases in upstream production mean the future looks brighter," Hyett said "Perhaps most importantly the dividend looks increasingly secure. If net debt goes into decline next quarter, then BP will be well and truly on the road to recovery.”

Group profit before interest and tax rose to $4.7bn from $2.7bn. BP left the dividend unchanged at 10 cents a share.