BP announced it made record profits in the third quarter after cashing in on the tail-end of the boom in oil and gas prices, delighting the City and putting shareholders in line for big increases in dividends.
BP announced it made record profits in the third quarter after cashing in on the tail-end of the boom in oil and gas prices, delighting the City and putting shareholders in line for big increases in dividends.
The company grew profits on the key replacement cost measure by 148% to $10.03bn (£6.45bn) in the three months to September, from $4.04bn in the same period last year, in a performance that chief executive Tony Hayward said was "obviously helped" by the spike in oil and gas prices.
The results cover a period when BP realised an average $111.47 per barrel of liquids compared with $71 in the third quarter of 2007.
Oil prices have fallen from a record high of $147 in July to around $60 a barrel as storm clouds gather over the global economy, despite moves by Opec to cut production.
However, hailing the results of the reform drive he initiated after replacing Lord John Browne last year, Hayward said more good times were in store. "I believe BP is well-positioned to cope with such volatility," he said, noting the company had a strong balance sheet.
Hayward said BP would reap the benefits of increased revenues as huge new projects go onstream and key US refineries return to full production. The company began production at Gulf of Mexico oilfield Thunder Horse in June.
BP produced 3.66 million barrels of oil equivalent a day in the third quarter, 5% ahead of last year on an underlying basis.
Moves to simplify the company, under which BP is axing 4600 posts, will boost the bottom line.
This will help offset the effects of falling prices for oil and gas and the impact of reduced demand for refined products and petrol.
In an apparent swipe at rivals, Hayward added: "We have committed less of our portfolio to high-cost options like tar sands and gas conversion than some of our peers."
Some believe the recent fall in oil prices could make tar sands projects that involve huge mining operations uneconomic.
Executives believe the company's scale could help as tough times make others more inclined to cut deals.
"We think the current turmoil may in fact create opportunities for us and we will look at those very closely,"
said Hayward.
Byron Grote, chief finance officer, said potential buyers of BP's US convenience stores faced difficulty raising loans. However, BP has remained able to access debt markets on favourable terms.
Grote said BP would be more likely to acquire assets than companies, and could spend several billion dollars.
The process of rationalising assets acquired in a series of big acquisitions had "pretty much run its course".
UK exploration and production profits surged to $2.5bn from $633m in the third quarter of 2007.
Grote confirmed BP expected to continue the progressive dividend policy outlined in February. This assumed oil prices of $60 to $90 barrel but would be sustainable at lower prices.
BP sparked renewed demands for a windfall tax on sector firms by announcing it will pay a dividend of 14 cents a share in December, up 30% in dollar terms and more than 60% in Sterling versus a year ago.
Shares in BP rose 5%, or 23.5p, to 461.5p, following the forecast-beating results, which Dresdner Kleinwort analyst Colin Smith called "outstanding".
Grote said the shares were excellent value at current levels.
