BP bosses have underlined the importance of the company’s North Sea business after it more than doubled annual profits.
The oil and gas giant grew underlying profits to $12.7 billion in 2018 from $6.2bn in the preceding year with rising production helping it capitalise on the increase in the crude price during the year.
BP included the Clair Ridge development West of Shetland in a list of major start-ups achieved during the year.
Read more: BP expects production at giant Shetland oil field to last for decades
The field came onstream in November with production set to last for decades.
BP approved other North Sea projects last year, which will help the firm develop its production base.
Chief executive Bob Dudley signalled yesterday that more approvals could be on the way. In a call with City analysts, he said more North Sea Final Investment Decisions are coming up.
While BP is excited about emerging areas such as Senegal, bosses made clear they see the North Sea as a key element in what they regard as a well-balanced global portfolio.
The head of BP’s upstream exploration and production business, Bernard Looney, said the North Sea was one of the company’s top four cash generating regions. It belongs to a group of established regions which “give and give and give”.
The performance of the North Sea business had improved significantly in recent years, measured in terms of the availability of production facilities.
The North Sea will feature in the programme of “key wells” it will drill in 2019.
Read more: BP highlights scale of latest North Sea finds
BP generated excitement in the industry in January when it said it had made finds West of Shetland and east of Aberdeen. The head of its North Sea business, Mark Thomas, said then the company expected to double production in the area to 200,000 barrels a day by 2020.
BP directors made no mention of Brexit yesterday.
The upbeat assessment of the North Sea contrasts with signs that the company appeared to be losing interest in the area as it grappled with the fallout from the crude price plunge between 2014 and 2016.This compounded the challenges posed by the disastrous spill in the Gulf of Mexico in 2010. The costs associated with the spill increased by $1.2bn before tax last year, to $67bn in total.
BP sold off a raft of assets in the North Sea to help it raise cash and shed around 600 jobs in the area.
Read more: One in three North Sea oil jobs 'lost' since 2015
Giant rival Shell made similar retrenchment moves during the downturn. The Anglo-Dutch firm’s chief executive Ben van Beurden said last week that the company was now focused on growth in the North Sea. Shell grew annual profits by 36% to a four-year high of $21.4 billion (£16.3bn), from $15.8bn.
Both BP and Shell say they will follow disciplined investment policies to support their efforts to increase returns to shareholders.
BP increased its fourth quarter dividend to 10.25 cents per share, from 10 cents las t time. Finance chief Brian Gilvary raised the prospect of a sizeable return of cash to shareholders via buy backs.
Mr Dudley said BP’s strategy was clearly working and would serve the company and its shareholders well through the energy transition.The company bought the operator of the UK’s largest vehicle charging network, Chargemaster, last year.
It received an average $71.31 per barrel for Brent crude last year, against $54.19 the preceding year.
Read more: Life is set to remain tough for oil services firms
Brent crude has fallen from a four year high of $85 per barrel in October to around $62.30 amid booming output in the US shale fields. BP expanded in that market through the $10.5bn acquisition of a portfolio from BHP last year. It can break even at $50/bbl.
Total production increased by 3% annually last year, to 3.7m barrels of oil equivalent a day.
BP shares closed up 5%, 26.9p, at 547p.
Why are you making commenting on The Herald only available to subscribers?
It should have been a safe space for informed debate, somewhere for readers to discuss issues around the biggest stories of the day, but all too often the below the line comments on most websites have become bogged down by off-topic discussions and abuse.
heraldscotland.com is tackling this problem by allowing only subscribers to comment.
We are doing this to improve the experience for our loyal readers and we believe it will reduce the ability of trolls and troublemakers, who occasionally find their way onto our site, to abuse our journalists and readers. We also hope it will help the comments section fulfil its promise as a part of Scotland's conversation with itself.
We are lucky at The Herald. We are read by an informed, educated readership who can add their knowledge and insights to our stories.
That is invaluable.
We are making the subscriber-only change to support our valued readers, who tell us they don't want the site cluttered up with irrelevant comments, untruths and abuse.
In the past, the journalist’s job was to collect and distribute information to the audience. Technology means that readers can shape a discussion. We look forward to hearing from you on heraldscotland.com
Comments & Moderation
Readers’ comments: You are personally liable for the content of any comments you upload to this website, so please act responsibly. We do not pre-moderate or monitor readers’ comments appearing on our websites, but we do post-moderate in response to complaints we receive or otherwise when a potential problem comes to our attention. You can make a complaint by using the ‘report this post’ link . We may then apply our discretion under the user terms to amend or delete comments.
Post moderation is undertaken full-time 9am-6pm on weekdays, and on a part-time basis outwith those hours.
Read the rules here