BP has posted a 300 per cent increase in second quarter profits helped by the recent rise in the oil price as it underlined the strategic significance of its latest investment decisions in the North Sea.
The oil and gas giant achieved a $2.8 billion profit on the replacement cost measure followed by analysts in the three months to June, compared with $0.7bn in the same period last time.
The key exploration and production arm achieved its best result since the third quarter of 2014, during which a long boom in the industry came to an end.
Read more: North Sea supply chain needs oil firms to increase activity quickly
The crude price started tumbling in that period as growth in output ran ahead of demand, triggering a three year downturn which took a heavy toll on the North Sea.
Yesterday’s results announcement by BP provides the latest sign that brighter times have returned to the industry following moves by major exporters such as Saudi Arabia to support the market.
These have helped the crude price recover to around $75 per barrel after falling below $30/bbl in the first quarter of 2016.
Led by chief executive Bob Dudley, BP directors underlined their confidence in the firm’s prospects. It is feeling the benefit of the crude price rise, cost cutting and moves to focus spending on the brightest growth prospects.
Mr Dudley said BP had made steady progress against its strategy and plans, delivering another quarter of strong operational and financial performance.
Read more: Oil industry leaders welcome show of faith in North Sea from BP
“Given this momentum and the strength of our financial frame, we are increasing our dividend for the first time in almost four years,” he said. “This reflects not just our commitment to growing distributions to shareholders but our confidence in the future.”
BP said last week it would increase the fourth quarter dividend by 0.25%, to 10.25 cents per share, and return up to a further $6bn to investors through share buy backs. These will be funded through asset sales.
The company also announced a $10.5bn deal to buy a huge portfolio of US shale assets from BHP Billiton, in its biggest acquisition for years.
BP sold off a raft of UK North Sea assets and shed around 600 jobs in the area amid the crude price plunge. This compounded the problems caused for the firm by the disastrous Gulf of Mexico oil spill in 2010.
Read more: One in three North Sea oil jobs 'lost' since 2015
But directors now appear to be keen to maximise the growth potential of the slimmed down North Sea portfolio.
This includes giant fields BP has been developing West of Shetland with partners.
BP said yesterday that recent strategic portfolio management moves had included the company increasing its interest in the Clair field off Shetland, through a deal with ConocoPhillips. It described the field as an advantaged oil asset with growth potential.
The second phase of the development, Clair Ridge, is one of three major projects BP expects to bring online in the second half.
Mr Dudley flagged up the development potential of Clair on a call with analysts.
The company also noted it had decided in April to go ahead with developing the Alligin and Vorlich fields in the North Sea. This will entail a £420million investment with partners.
BP was awarded seven licences in the latest UK exploration round, including two West of Shetland.
It employs around 1,500 in the UK North Sea.
BP’s results beat analysts forecasts of around $2.7bn.
The company outperformed giant rivals including Royal Dutch Shell in the second quarter.
Shell last week posted a 30% rise in second quarter earnings, to $4.7bn, compared with analysts’ expectations of $5.9bn.
The Anglo-Dutch giant launched a long-awaited $25bn share buy back programme.
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