“We delivered strong operational performance in the first half of 2017 and have considerable strategic momentum coming into the rest of the year and 2018, with rising production from our new upstream (exploration and production) projects and marketing growth in the downstream (the refining of petroleum crude oil),” he added.
BP currently has one of the highest “breakeven” prices among its peers, after a series of acquisitions at the start of the year pushed up its spending plans. The estimated oil price at which BP‘s upstream assets would offset its costs stands at $60 a barrel, above the market rate of around $50 a barrel.
“I think the most important thing is that there was a very strong cash generation again this quarter from BP,” Jason Gammel, global integrated oil and gas equity research analyst at Jeffries, told CNBC on Tuesday.
“This is the second quarter in a row where we calculate that the company is covering the cash component of their dividend with free cash flow … I think that’s the most important thing to focus on today,” he added.
While Gammel warned he did not envisage BP getting back to “pre-Macondo” production levels anytime soon, referring to the Deepwater Horizon oil spill, he did say the company appeared to be in the “very final stages” of dealing with the economic losses connected to the 2010 Gulf of Mexico disaster.
BP’s payments related to the Gulf of Mexico settlement are poised to reach between $4.5 billion and $5.5 billion in 2017, while an additional $2 billion is expected to be paid in 2018. The company has so far paid a pre-tax total of $63.2 billion in clean up costs and penalties, Reuters reported.
BP’s latest figures comfortably surpassed analyst expectations on Tuesday, joining European peers such as Total and Royal Dutch Shell in posting forecast-beating results for the second quarter.
Royal Dutch Shell reported last week that its profits were three times larger than over the same period a year earlier. Meanwhile, French oil and gas giant Total also beat expectations on Thursday, posting a 14 percent increase in adjusted net income when compared to the second quarter in 2016.
Digital Reporter, CNBC.com