BP profits surge after oil giant shrugs off three-year slump

BP’s profits more than doubled in 2017 to $6.2 billion powered by higher prices and output of oil and gas, allowing the company to resume share buybacks as it recovers from a three-year downturn. (AFP)
Updated 06 February 2018

BP profits surge after oil giant shrugs off three-year slump

LONDON: BP’s profits more than doubled in 2017 to $6.2 billion, powered by higher prices and output of oil and gas, allowing the company to resume share buybacks as it recovers from a three-year downturn.
The London-listed company saw one of the strongest output increases in its history last year, lifting production to levels not seen since the 2010 Deepwater Horizon spill.
Production is set to continue growing into the end of the decade thanks to more field start-ups this year.
BP would generate profits in 2018 at an oil price of $50 a barrel, Chief Financial Officer Brian Gilvary told Reuters, as years of spending cuts kicked in and it slowly shakes off a $65 billion bill for penalties and clean-up costs of the 2010 spill.
BP was the first among its European peers to resume share buybacks in the fourth quarter of 2017 after years of dilutive austerity measures in the face of the industry slump.
With a 20 percent bounce in oil prices in the last quarter of 2017 to $61 a barrel, BP had a surplus of cash that allowed it to buy $343 million worth of shares in the fourth quarter, offsetting the scrip dilution.
“2017 was one of the strongest years in BP’s recent history,” CEO Bob Dudley said in a statement. “We enter the second year of our five-year plan with real momentum, increasingly confident that we can continue to deliver growth.”
Full-year production rose 12 percent to 2.47 million barrels per day (bpd) after BP launched seven new oil and gas fields in 2017, a record year.
It is set to start up six additional projects this year, including in Egypt, Azerbaijan and Britain’s North Sea, helping boost production by 900,000 barrels of oil equivalent per day by 2021, most of it gas. It previously said it would launch five new projects this year.
BP added about 1 billion of barrels of oil, equivalent to its reserves in 2017, the largest since 2004, thanks to six discoveries, including in Senegal and the North Sea. Its reserve replacement ratio was estimated at 143 percent for the year.
The company’s refining and trading business, known as downstream, saw profits rise to $7 billion in 2017 as earnings for the marketing division rose by more than 10 percent.
Cash flow in the fourth quarter rose slightly to $6.2 billion, but fell short of market expectations, raising concerns that cost cuts have run their course and echoing concerns about rivals Royal Dutch Shell, Exxon Mobil and Chevron which reported last week.
The weakness was due mostly to lower-than-expected income from refining operations, BMO Capital Markets analyst Brendan Warn said.
Payments for the Deepwater Horizon spill continued to weigh on BP, which took a $1.7 billion charge in the quarter due to higher-than-expected claims settlements, bringing the total legal and clean-up costs to $65 billion.


China aims for sustained and healthy economic development

Updated 30 October 2020

China aims for sustained and healthy economic development

  • Beijing to let market forces play decisive role in resources allocation, report says

BEIJING: China is targeting sustained and healthy economic development in the five years to 2025, with an emphasis on a higher quality of growth, the Xinhua news agency said on Thursday, citing the ruling Communist Party’s Central Committee.

President Xi Jinping and members of the Central Committee, the largest of the ruling party’s elite decision-making bodies, met behind closed doors from Monday to lay out the 14th five-year plan, a blueprint for economic and social development.

China’s external environment “is getting more complicated,” the agency said, adding, “There is a significant increase in instabilities and uncertainties.”

BACKGROUND

China aims to boost its gross domestic product (GDP) per person to the level of moderately developed countries by 2035, while GDP is due to top 100 trillion yuan ($15 trillion) in 2020.

However, the country’s development was still in a period of important strategic opportunities, despite new challenges, it said.

It added that China aims to boost its gross domestic product (GDP) per person to the level of moderately developed countries by 2035, while GDP is due to top 100 trillion yuan ($15 trillion) in 2020.

China will also deepen reforms and let market forces play a decisive role in resources allocation, the agency said.

China will promote a “dual circulation” model, make self-sufficiency in technology a strategic pillar for development, move to develop and urbanize regions, and combine efforts to expand domestic demand with supply-side reforms, it added.

The “dual circulation” strategy, first proposed by Xi in May, envisages that China’s next phase of development will depend mainly on “domestic circulation” or an internal cycle of production, distribution and consumption, backed by domestic technological innovation.