BP PLC (LON:BP.) saw its first-quarter profit drop by almost a third but the oil major still beat forecasts as higher production and a stronger trading performance offset lower oil and gas prices and weaker refining margins.
For the quarter ending 31 March 2018, the FTSE 100-listed firm saw its underlying replacement cost profit fall to US$2.4bn, down from US$2.6bn a year earlier, exceeding forecasts for US$2.3bn.
READ: BP up as profits double again in 2018 but that won’t be reflected in shareholders’ pay-outs
The company said its oil and gas production in the quarter - excluding its stake in Russia's Rosneft - increased by 2% year-on-year boosted by the acquisition of BHP Group PLC’s (LON:BHP) onshore US shale portfolio and the start-up of new projects.
BP added that its cashflow from operations fell by over 20% to US$5.3bn, having reached the highest level in four years in the previous quarter.
Bob Dudley, BP’s chief executive officer said: "With solid Upstream and Downstream delivery and strong trading results, we produced resilient earnings and cash flow through a volatile period that began with weak market conditions and included significant turnarounds.
“Moving through the year, we will keep our focus on disciplined growth, with efficient project execution and safe and reliable operations.”
The company is to pay a quarterly dividend of 10.25 US cents, 2.5% higher than a year earlier.
Progress complicated but clearly visible
Richard Hunter, head of markets at interactive investor, commented: “BP may not have repeated its immense performance from the full year numbers in February, but nonetheless remains on track to deliver on its strategic promises.
“The company’s prodigious cash flow continues to enable its share buyback programme, which will ramp up further in the second half of the year. Meanwhile, there is also an increase to the dividend in the quarter, which will add to an already attractive yield of 5.6%.”
Overall, however,” he added, “progress may be complicated but it is clearly visible. The shares have also seen the benefit of BP’s stated objectives, having risen 3% over the last year, which compares to a dip of 1% for the wider FTSE100 and having spiked 10% in the last three months alone.
“The company’s historic position as a core portfolio constituent is in little danger, and a matching market consensus of the shares as a buy is most likely to remain intact.”
In early morning trading, BP shares were 0.3% higher at 554.40p.
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