Profit at BP close to tripled during the first three months of 2017 compared to the same period one year earlier, buoyed by an increase in oil prices along with production that hit a high of five years, while debt increased so it could pay for new acquisitions and costs for the Gulf of Mexico 2010 spill.
The British gas and oil company joined its major rivals in oil including Chevron, Total and Exxon Mobil in posting quarterly earnings that were stronger than had been expected thanks in a big part to higher prices of both gas and oil.
Oil prices increased 50% during the last year to a first quarter high of $54 per barrel.
BP is expecting prices to be between $50 and $55 per barrel during 2017, heading to the higher price range if OPEC and other major producing nations extend cuts in production to include the second six months of 2017, said Brian Gilvary the CFO at BP.
The results from BP might ease some worries amongst investors, who had their nerves tested when BP raised the price of oil in February at which its books could be balanced to $60 per barrel after a number of investments that increased its borrowing.
Three years ago the price of oil plummeted from $115 per barrel to less than $30 per barrel. After BP slashed its costs through project delays and layoffs, investors wanted to see the generation of cash to cover its spending as well as payouts of dividends, while lowering its debt that had ballooned.
Shares of BP were 2.4% higher early Tuesday the biggest blue chip winner in London early in the day’s trading.
Net debt increased 9% during the three-month period, to more than $38.5 billion, which lifted the gearing of net debt at BP to equity of shareholders to 28% from 26%, closer to its 30% ceiling.
The debt was going to increase always during the first six months of the year and the gearing of 28% is not a cause for worry said Gilvary.
To maintain buoyant oil prices, oil companies have asked that OPEC and other countries that export oil such as Russia to extend the global pact of lowering productions for the second six months of 2017.
This year, BP has scheduled seven project startups including in Azerbajin and Oman. The seven startups are the largest number for one year in the history of BP.
It hopes that by the end of the current decade, it increases new oil production by over 800,000 barrels daily.