BP’s profits more than doubled in 2017 to $6.2bn (€4.98bn) 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 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 said, as years of spending cuts kicked in and as it slowly shakes off a $65bn 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 dilutive austerity measures in the face of the industry slump. With a 20% 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 $343m worth of shares in the fourth quarter, offsetting the scrip dilution.
BP shares were trading slightly lower, outperforming sharp declines for the oil sector in London trade. The shares are up almost 8% in the past year.
“2017 was one of the strongest years in BP’s recent history,” chief executive Bob Dudley said. “We enter the second year of our five-year plan with real momentum, increasingly confident that we can continue to deliver growth,” he said.
Full-year production rose 12 percent to 2.47 million barrels per day 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 in the 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 was added about one 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.
BP’s refining and trading business, known as downstream, saw profits rise to $7bn in 2017 as earnings for the marketing division rose by more than 10%.
Cash flow in the fourth quarter rose to $6.2bn but fell short of market expectations, raising concerns that cost cuts have run their course, echoing concerns about rivals Royal Dutch Shell, Exxon Mobil, and Chevron which reported last week.