BP flags possible dividend boost as profits surge

BP's Efforts to Get Back Among Big Oil's Elite Start to Pay Off

BP's Efforts to Get Back Among Big Oil's Elite Start to Pay Off

The move came after the London-based company reported its best quarterly profit since mid-2014, boosted by higher oil prices and rising production.

Still, what investors are watching most closely is cash flow, as this is what pays the bills in oil and gas, not net profits that some observers have aptly noted can be adjusted to suit the reporting company's needs. This tops their initial prediction of $2.2 billion according to to a company-provided analytics survey.

Underlying replacement cost profit for the three months to the end of March rose to $2.6bn (?1.9bn) from $1.5bn a year earlier.

"The spill payment in the first quarter was "$500 million more than I expected", although that probably means the burden will be lower later this year, Redburn analyst Rob West said.

"We have delivered another strong set of results", said chief executive Bob Dudley.

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BP posted a profit of almost $2.5 billion for the first quarter of the year, rising from a profit of just over $1.4 billion over the same period last year.

Operating cash flow excluding payments made following the oil spill in the Gulf of Mexico stood at $5.4bn, including a $1.8bn negative impact from an increase in working capitals. "This should help improve confidence around BP's dividend".

The company has also demonstrated that despite the general wariness in the industry, the supermajors are investing in new production: in the last quarter, BP made a final investment decision on four new projects-two in the United Kingdom portion of the North Sea, one in India, and one in Oman. Royal Dutch Shell plc generated less cash than analysts forecast in the first quarter, and its shares were hammered after chief financial officer Jessica Uhl said that the company was not yet ready to commence a US$25 billion stock repurchase programme.

Investors are now hoping for the company to announce its first dividend increase since the third quarter of 2014.

It paid out some US$1.6bn in payments connected to the Gulf of Mexico oil spill, including the US$1.2bn final payment relating to the 2012 settlement with the US Department of Justice. Payments are expected to be just over $3 billion in 2018, weighted to the first half of the year. It expects the total payout for this year to reach $3bn. At the same time, Mr Dudley has also pledged to keep a tight rein on spending and costs. Off-topic, inappropriate or insulting comments will be removed.

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