BP Profits Up in 3Q, One Big 2017 Project Yet to Launch
BP increased its profit by 9% year on year to $1.769bn in the third quarter, it said October 31. Underlying replacement cost (RC) profit was $1.9bn, compared with $933mn in the same period last year and $684mn in the second quarter of this year.
Excluding its share from Rosneft, its output was 2.462mn barrels of oil equivalent/day ( boe/d), up 16.3% year on year, made up of 1.341mn b/d liquids and 6.5bn ft3/d gas.
It sold its liquids for an average $47.45/b compared with $40.99/b in Q3 2016, while its price went for an average $2.89/mn Btu, not much changed from last year's $2.77/mn Btu.
“This quarter, three new upstream projects and the highest downstream earnings in five years, underpinned by reliable operations and disciplined spending, have generated healthy earnings and cash flow,” said CEO Bob Dudley.
The three upstream projects – Persephone in Australia, the Juniper gas project in Trinidad (expected to reach 95,000 boe/d), and the first phase of the Khazzan tight gas development in Oman – all started production in the third quarter, said BP, which means that six of the seven major projects that it expected online in 2017 have now started up. “The seventh, Zohr in Egypt, is on track to start up before the end of the year,” it added.
Production on the same basis for January-September 2017 was 2.427mn boe/d, while inclusive of its 19.75% equity share of Rosneft output BP group production was 3.557mn boe/d, in both cases up 10% year on year.
Upstream profit in 3Q increased to $1.255bn from last year's $1.183bn reflecting higher liquids and gas prices, higher production including the impact of the Abu Dhabi concession renewal and major project startups, lower exploration write-offs, partly offset by higher depreciation, depletion and amortisation.
CFO Brian Gilvary told analysts that capex out to 2021 will be between $15bn and $17bn/yr, and not exceed $17bn in any year. Organic capex in 2017 is expected to be $16bn, he said. If oil prices fall, BP would aim to reduce capex to a lower level.
He also noted that Aker BP last week announced takeover of Hess Norge, which will make the former sole owner of the Valhall and Hod oilfields.
Divestment proceeds for the first nine months of 2017 were $1bn, but BP expects this to reach $4.5bn in full year 2017 because of proceeds from the SECCO downstream joint venture in China ($1.4bn) and the initial public offering of BP Midstream Partners in the US ($0.7bn). Gilvary said he was "very confident" that the $4.5bn target would be achieved, and that some would be closing in the next few weeks.
Payments relating to the 2010 Macondo disaster in the US Gulf of Mexico are expected to be $5.5bn in 2017, but scale down to $2bn next year, and $1bn in 2019.
BP outlines how it has only the (Eni-operated) Zohr field yet to come onstream in 2017, from among its seven scheduled 2017 major project start-ups (Graphic credit: BP)
Mark Smedley