Profits for oil giant BP fell yet again in the first quarter of 2013, down 9% to $4.2bn, but this is vastly higher than City analysts were expecting. Most were predicting profits almost a billion dollars lower at $3.27bn, so it’s a touch of swings and roundabouts. Or barrels and derricks.
So why was it better than expected? The company puts the surprising figures down to a series of new high-margin areas that have recently come on stream, including the enormous PSVM project in Angola, and the North Sea’s Skarv field. It says that these new sites have compensated for the loss of assets that have been sold off to pay for ongoing Deepwater Horizon costs. Those costs, by the way, have so far ratcheted up to over $42bn – no laughing matter.
Chief executive Bob Dudley said: ‘These strong first quarter results demonstrate the progress BP is making in delivering the performance milestones that support our 10-point plan and underpin our commitment to material operating cash flow growth by 2014.’
He also pointed out that because of the sale of BP’s stake in Russian joint venture TNK-BP the firm is now able to return around $8bn to shareholders as part of an extensive share buyback programme, to strengthen the business. The rest of the cash from the sale in Russia will be used to pay down company debts, although it did not specify how much.
What else has BP got in the pipeline, we hear you ask? Last month it emerged that it is leading a consortium of other oil companies to invest £330m in an appraisal-drilling programme (basically to find out if the area is viable) in the Atlantic. If it were a workable area, the new project would involve massive expansion of BP’s Clair oilfield, west of the Shetland Islands and could be enough to support up to 12 new wells. In total, Clair could contain up to eight billion barrels of oil, and given that the world uses about 90 million barrels a day, that’s 88 days’ worth. For the entire planet.
It’s starting to look like BP might finally be coming out the other end of its Deepwater Horizon struggles. There are still question marks over just how much the cost of civil lawsuits will be in the US (so far it’s only been federal suits and compensation). But having busted out of its Russian venture and still smashed expectations by a billion dollars is pretty good going. Perhaps 2013 will be its first good year since the whole oil-spillage headache kicked off…