BP back in the black as oil prices rise
Recent hikes in the price of oil and a global cost-cutting exercise helped BP to return to profit in the first quarter of this year.
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.”Related news:
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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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