BP More Than Doubles Its Profit -- WSJ
31 October 2018 - 6:02PM
Dow Jones News
The oil giant says it will pay for its near $11 billion
acquisition of BHP assets in cash
By Sarah Kent
This article is being republished as part of our daily
reproduction of WSJ.com articles that also appeared in the U.S.
print edition of The Wall Street Journal (October 31, 2018).
LONDON -- BP PLC said Tuesday its profit more than doubled in
the third quarter, as strong crude prices put Big Oil on track to
deliver record levels of cash this year.
London-based BP said its replacement cost profit -- a number
analogous to the net income that U.S. oil companies report -- was
$3.1 billion in the third quarter, compared with $1.4 billion in
the same period a year earlier. Its underlying profits rose to $3.8
billion, a five-year high and roughly a third higher than analysts
expected.
BP shares were up about 4% in early trading in London.
Exxon Mobil Corp., Chevron Corp. and Royal Dutch Shell PLC are
all due to report results later this week.
Years of cost-cutting caused by the slump in oil prices are
beginning to pay dividends for the industry's giants as the market
rebounds. But investors remain skeptical, making solid delivery on
results crucial for companies like BP.
Last week, French oil giant Total SA and Norway's Equinor ASA --
formerly known as Statoil -- both announced a sharp increase in
earnings for the third quarter, while continuing to emphasize their
commitment to control spending and grow production.
BP echoed that sentiment. The company said it remains committed
to capital discipline and growing distributions to shareholders.
The British oil giant has already delivered on popular shareholder
programs, increasing its dividend in July.
BP said it's generating so much cash at the moment that,
provided oil prices remain around their current range, the company
will pay for its near $11 billion acquisition of BHP Billiton Ltd's
onshore U.S. oil and gas assets entirely in cash. When the deal was
announced in July, BP had planned to fund 50% of the purchase
through equity.
"We're very confident in the outlook for the company," Chief
Financial Officer Brian Gilvary said. "The oil price is currently
north of $75; we break even at $50...we have more than sufficient
surplus cash."
BP said it expects to complete the BHP transaction Wednesday.
Linked to the deal, BP is planning $5 billion-$6 billion-worth of
divestments, with the proceeds intended to pay down the company's
debt.
It's also closing in on its ambition to return to production
levels last seen before the company's fatal blowout in the Gulf of
Mexico eight years ago. To pay for the disaster, which killed 11
people and caused the worst offshore oil spill in U.S. history, BP
sold off billions of dollars of assets, shrinking its production.
In addition to its acquisition of BHP's assets, BP started
production from two new major projects this month.
"The key focus is growing the company," Mr. Gilvary said. "We
laid out a program for 2021 with growth targets. We're ahead of
those targets."
BP said payments related to the 2010 disaster amounted to $500
million in the third quarter, and are expected to total just over
$3 billion this year. BP's landmark $20 billion settlement with the
U.S. government in 2015 requires the company to make annual
payments of around $1 billion through the end of the next
decade.
Corrections & Amplifications The company will pay for its
near $11 billion acquisition of BHP Billiton Ltd's onshore U.S. oil
and gas assets entirely in cash. An earlier version of this article
misspelled BHP Billiton.
Write to Sarah Kent at sarah.kent@wsj.com
(END) Dow Jones Newswires
October 31, 2018 02:47 ET (06:47 GMT)
Copyright (c) 2018 Dow Jones & Company, Inc.
BHP (ASX:BHP)
Historical Stock Chart
From Apr 2024 to May 2024
BHP (ASX:BHP)
Historical Stock Chart
From May 2023 to May 2024