BP has boosted oil output under its new chief executive putting the company on track to benefit from the recent rally in crude prices.
Shares in the energy giant rose to a five-month high yesterday after the company said its oil and gas production increased in the first quarter of this year compared with the last three months of 2023.
The news was included in a trading update which appears to have supported sector watchers’ confidence in BP’s trading prospects.
BP made $13.8 billion (£11bn) profit last year.
READ MORE: Crude price surge may fuel inflation and calls for windfall tax hike
Yesterday’s trading update was the first issued by BP since Murray Auchincloss was confirmed in post as chief executive in January.
Mr Auchincloss became acting chief executive in September following the surprise resignation of Bernard Looney.
BP said then that Mr Looney had informed the company that he had not been fully transparent in his previous disclosures about historical relationships with colleagues.
News of the increase in oil and gas production at BP may result in the company coming under renewed fire from environmental campaigners.
In his four years in charge Mr Looney launched a drive to transform BP from being an oil and gas business into an integrated energy company that could help support the transition to a lower carbon energy system.
In 2020 Mr Looney said BP would cut oil and gas production by 40% by 2030, from 2019 levels. He said BP would invest heavily in transition businesses, such as wind power.
READ MORE: SNP Government must turn grand words on climate into action
Following the surge in oil and gas prices fuelled by Russia’s war on Ukraine, which increased concerns about energy security, Mr Looney modified those targets.
Last year BP said it expected to cut oil and gas production by 25% by 2030, from 2019 levels.
Mr Looney said BP would need to invest in securing the supplies of oil and gas the world needed while helping to develop low carbon energy sources.
BP claims it can use the profits generated from oil and gas production to fund investment in areas ranging from offshore wind to hydrogen production and payouts to investors.
After he was confirmed in post, Mr Auchincloss underlined his belief in the strategy developed by his predecessor.
Mr Looney highlighted the value of BP’s North Sea production and noted the potential to increase the returns generated on the investment BP has made in recent years in areas such as West of Shetland.
READ MORE: Cambo plans boosted as North Sea oil giants take long view
Mr Auchincloss played an important part in the development of the North Sea operation. He was chief financial officer of the business from 2008 to 2010.
The Canadian executive’s father emigrated to Canada from Scotland.
BP did not provide details of the scale of the increase in oil production announced yesterday or in which countries it was achieved.
The company said its production of gas and low carbon energy was slightly higher in the first quarter than in the preceding three months.
BP noted that average oil and gas prices were lower in the first quarter than in the preceding three months.
However, the output from oil operations in areas such as the North Sea could help BP grow earnings following the surge in oil prices in recent weeks.
READ MORE: Historic North Sea field to be revitalised by Malaysian firm
Brent crude sold for $89.77 yesterday afternoon. The price has risen by more than 15% from $76/bbl in January amid concerns about the potential fallout from the conflict in Gaza and Russia’s war on Ukraine.
The Brent crude price averaged $83/bbl in 2023.
Ann-Louise Hittle, Vice President, Oil Markets at Wood Mackenzie said the energy consultancy expects demand for oil and gas to increase faster than production this year .
Members of the Opec + exporters cartel last month extended cuts in production that were introduced in 2022 to support prices.
Shares in BP closed up 6.7p at 516.6p. It has a stock market capitalisation of around £86 billion.
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