BP recorded a $1.4 billion profit on the replacement cost measure, compared to a $485 million loss in the first three months of 2016.CEO Bob Dudley said, “Our year has started well. BP is focused on the disciplined delivery of our plans. First quarter earnings and cash flow were robust.“The first of our seven new upstream major projects has started up, with a further three near completion. We expect these to drive a material improvement in operating cash flow from the second half.”BP’s figures came on the heels of healthy earnings reports from ExxonMobil and Chevron, with Royal Dutch Shell expected to announce a similar earnings leap when it reports on 4 May.

Encouraging results

Michael Hewson, chief market analyst at CMC Markets UK, commented, “Today’s Q1 results are encouraging with a £1.45 billion profit as production starts at a number of new upstream projects, including in Egypt, in the West Nile Delta.“Revenue came in well above expectations at $55.5 billion and the company kept its quarterly dividend unchanged at $0.10c a share, which equates to a yield of nearly 7 per cent, against a dividend cover that isn’t anywhere near the level needed to be sustainable.“The overriding worry remains debt, which continues to rise, up to $38.6 billion from $30 billion a year ago, and while BP has managed to return to profit due to improving revenues, cost cutting and divestments that break-even oil price may need to come down further, or the company will start to have to look at cutting the dividend.”

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Nicholas Hyett, equity analyst at Hargreaves Lansdown, agreed that the company’s significantly higher debt could cause nervousness. “A stretched balance sheet means BP will have less and less resilience to deal with the unexpected. Until that is resolved, doubts will remain over the long-term sustainability of the dividend to which BP have stuck resolutely so far,” he said.Jason Gammel, analyst at Jefferies, described the results as “strong”, with the exploration and production division almost a fifth better than expected.Get access to our free Global Mobility Toolkit

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