BP recovers from GOM spill with £3.2 billion Q3 profit

October 25, 2011 | Budget & Investment

BP_Deepwater_Horizon_rig

Oil giant BP today reported profits of $5.1 billion (£3.2 billion) in the three months to September, showing its recovery from last year’s Gulf of Mexico oil spill.

The company’s third quarter profits show massive growth compared to their $1.8 billion (£1.3 billion) made for the same period last year.

BP’s CEO Bob Dudley said he expected the company’s cashflow to grow by around 50 per cent by 2014 – meaning even greater returns for shareholders.

The American, brought in to replace Tony Hayward in the wake of the 2010 disaster, said the extra cash would enable it to double its spending on new exploration and to increase its investment in its deep water operations, its giant fields and building its gas operations.

The group’s payments into the Gulf of Mexico Trust Fund will end in 2012 and will provide half of the increase in cashflow, he added, while 17 new projects are due to come on-stream over the next three years.

The cashflow forecast assumes oil prices of $100 per barrel, compared with an average of $112 so far this year, though lower production and higher maintenance activity and costs offset the benefit of higher prices in the latest quarter.

For the nine months to September, BP posted profits of $15.9 billion (£9.9 billion).

“The company has steadied, turned round and now, this month, with high-margin assets returning on stream, we have reached a clear turning point,” Mr Dudley said.

He added that BP had lived up to its commitments in the Gulf and was putting “safety and risk management at the absolute heart of our business”.

Shares rose three per cent after the update.

The oil firm also said it will also use any additional cash for higher dividends and more share buybacks, though the group held its latest third-quarter payment at seven cents despite City expectations of an increase.

The group will review its future dividend plans in February, it said today.

BP has had endured a torrid time since the Deepwater Horizon accident, which saw 11 oil rig workers killed and caused the biggest oil spillage in US history.

Mr Dudley has struggled to restore BP’s reputation and ran into fierce criticism himself following the failure of the share swap and exploration deal with Rosneft in May.

The share price is still almost one third below the level before the Gulf  tragedy, though some analysts said today’s figures suggested hope for the future.

Richard Hunter, head of equities at Hargreaves Lansdown Stockbrokers, said: “The real possibility that BP is at an inflection point has bolstered the shares in early trade.”

The Gulf of Mexico disaster stemmed from a sea-floor oil gusher that resulted from the April 20, 2010, explosion of Deepwater Horizon.

Around 4.9 million barrels of crude oil spilled into the ocean.