BP back in the black with half-year profits of £1.2 billion
BP has cheered a strong half-year as the oil major moved back into the black despite taking a hefty hit after exiting a project in Angola.
The oil major recorded half-year profits of 1.6 billion US dollars (£1.2 billion), climbing back from a 2 billion US dollar (£1.5 billion) loss for the same six months in 2016.
However, the firm saw profits slip to 144 million US dollars (£109 million) in the second quarter, down from 1.4 billion US dollars (£1.1 billion) for the first three months of year.
The fall was driven by a 753 million US dollar (£570 million) charge linked to the company's decision to call time on a number of exploration assets in Angola.
Shares in the firm rose more than 2% during morning trading on the London Stock Exchange, with investors saluting the better-than-expected earnings result.
Group chief executive Bob Dudley said: "We continue to position BP for the new oil price environment, with a continued tight focus on costs, efficiency and discipline in capital spending.
"We delivered strong operational performance in the first half of 2017 and have considerable strategic momentum coming into the rest of the year and 2018, with rising production from our new Upstream projects and marketing growth in the Downstream."
BP, which has been reshaping the business in order to cope with long-term low oil prices, said upstream production had grown by 6% and 10% for the half-year and second quarter respectively.
The oil giant said three new upstream projects came online this year, while two gas projects in India and Trinidad have also been sanctioned.
Upstream pre-tax profits rose to 2.1 billion US dollars (£1.6 billion) for the first half of the year, up from a 718 million US dollar loss (£543 million) in 2016.
In downstream - which comprises refining and petrol stations - pre-tax profits eased back slightly to 3.27 billion US dollars (£2.47 billion) in contrast to 3.28 billion US dollars (£2.48) in 2016.
It follows on from a healthy second-quarter performance for rival Royal Dutch Shell, which reported a large rise in profits boosted by higher oil and gas prices.
Shell said adjusted earnings rose from 1.05 billion US dollars (£800 million) to 3.6 billion US dollars (£2.7 billion), an increase of 245%, as chief executive Ben van Beurden said he is making progress on "reshaping the company".
The price of oil has risen back above the 50 US dollars mark to around 52 US dollars a barrel in recent weeks, despite traders questioning the ability of Opec led production cuts to tackle the global supply glut.
Nicholas Hyett, equity analyst at Hargreaves Lansdown, said the legacy of the Deepwater Horizon disaster was still stalking BP.
He said: "Were it not for the Deepwater Horizon oil spill more than seven years ago, BP would be in pretty good shape right now.
"Despite the tough oil price environment, cash flows would be comfortably ahead of capex and dividend expenses, and the group is still managing to spend a reasonable amount on developing new fields.
"As it is, the Gulf of Mexico payments, which had a negative cash impact of around 2 billion US dollars this quarter, continue to weigh on the group and are forcing it to take on an ever larger debt burden.
"Fortunately the group's Upstream division has delivered a strong set of numbers this time out, and while the Downstream refining business hasn't delivered the growth we've seen from the likes of Shell, it remains robustly profitable.
"Gulf of Mexico costs are expected to fall from here, but BP remains a bit of a waiting game."