Updated: Bob Dudley hails 2017 as one of strongest years for BP

BP chief executive Bob Dudley
BP chief executive Bob Dudley

BP chief executive Bob Dudley has hailed 2017 as one of the strongest years in the company’s recent history.

The firm delivered seven new major projects over the course of the 12 months, including Quad 204, west of Shetland.

And it returned to the black in 2017 with pre-tax profits of £5.14billion, a vast improvement on a deficit of £1.64billion in 2016.

Underlying profit rose 139% year-on-year to £4.4billion.

Total revenues for the full-year came to £175billion, up from £133billion the previous year.

The company’s balance sheet has been bolstered by higher crude prices and increased output.

BP produced 2.47million barrels of oil per day in 2017, 12% more than in 2016, giving the company its highest output total since 2010. Production costs dropped by 16%, meanwhile.

The business expects output to be even higher this year, thanks to the ramp up of major projects.

In terms of exploration, 2017 was BP’s best year since 2004, with around 1billion barrels worth of resources discovered.

Payments related to the Gulf of Mexico oil spill in 2010 totalled £3.7billion in 2017, down from £4.9billion in 2016.

Assets worth £3billion were divested during 2017.

Net debts stood at £27billlion at the end of 2017, up from £25.5billion 12 months earlier.

BP chief executive Bob Dudley said: “We delivered operationally and financially, with very strong earnings in the downstream, upstream production up 12%, and our finances rebalanced. And we did all this while maintaining safe and reliable operations.

“We enter the second year of our five-year plan with real momentum, increasingly confident that we can continue to deliver growth across our business, improving cash flows and returns for shareholders out to 2021 and beyond.

“At the same time, we are embracing the energy transition, seeking new opportunities in a changing, lower-carbon world.”

BP introduced a share buyback scheme to offset dilution from its scrip dividend in the fourth quarter. It bought £245million worth of shares during the three months.

Chief financial officer Brian Gilvary said: “We had strong delivery and growth across BP in 2017. The full-year underlying result was more than double a year earlier, our organic cash flows are back in balance and our financial frame remains resilient.

“Our share buyback programme in the fourth quarter offset the dilution from scrip dividends issued in September and our intent remains to offset any ongoing scrip dilution through further buybacks over time.”

Fiona Cincotta, senior market analyst at City Index, said: “BP’s profit rise has exceeded expectations as a continued focus on costs and commencement of new projects helped it make the most out of rising oil prices. As expected, the oil and gas business was the star, though the refining business has performed commendably considering the amount of maintenance activity planned for the period.

“The improving revenue performance will stoke hopes of a dividend hike. But with gearing still sitting at 27.4%, it’ll take a lot more of the same to shake management’s focus on capital discipline.

“BP has had to deal with the double whammy of the 2014 price crash and a $65 billion bill from the Deepwater Horizon disaster that’s still rising almost seven years later.

“With the energy sector facing another potential hazard in the form of electrification, there’ll need to be something left in the pot to invest in future growth.”