Oil price rally helps BP profits more than double

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Oil giant BP has cheered one of the strongest years in the company’s recent history after a hike in the cost of crude helped annual profits more than double.

The energy giant saw underlying replacement cost profit – BP’s preferred income measure – soar to $6.2 billion (£4.4 billion) for 2017, up from $2.6 billion  (£1.9 billion) the year before.

On a fourth-quarter basis, BP chalked up another rise at $2.1 billion (£1.5 billion), climbing from $400 million (£286.2 million) over the same three-month period in 2016

BP is among a string of oil majors benefiting from climbing prices, having seen Brent crude hit $70 per barrel last month – its highest level in more than three years.

Group chief executive Bob Dudley said: “2017 was one of the strongest years in BP’s recent history.

“We delivered operationally and financially, with very strong earnings in the downstream, upstream production up 12%, and our finances rebalanced.

“We enter the second year of our five-year plan with real momentum, increasingly confident that we can continue to deliver growth across our business, improving cash flows and returns for shareholders out to 2021 and beyond.”

The group said its 2017 performance “reflected higher oil prices” and a $163 million (£116.6 million) boost from an out-of-court settlement between Sistema, Sistema-Invest and Rosneft subsidiary Bashneft.

BP, which joined Shell in beating analysts’ earning’s forecasts, also unveiled brighter overall profits for the year at $3.4 billion (£2.4 billion), up from  $115 million (£82 million) in 2016.

However, the FTSE 100 firm posted a replacement cost (RC) loss for the fourth quarter at $583 million (£417 million), sinking from a $72 million (£51.5 million) profit during 2016.

Payments linked to the Deepwater Horizon oil spill hit $300 million (£214.6 million) in the fourth quarter, pushing the total bill for 2017 to $5.2 billion (£3.7 billion).

BP, which has seen its share price recover broadly in line with global energy prices, said earnings from its downstream were “very strong”, up 24% to $7 billion (£5 billion) on an underlying RC cost profit basis.

It said oil and gas production was bolstered by seven major projects coming on line, helping upstream production lift 12% over the period.

Brian Gilvary, BP’s chief financial officer, said: “We had strong delivery and growth across BP in 2017.

“The full-year underlying result was more than double  a year earlier, our organic cash flows are back in balance  and our financial frame remains resilient.”

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