BP Reports Strong 1Q, Shah Deniz On Target
BP said it achieved its strongest quarterly underlying result since the oil price crash of 2014.
The supermajor May 1 reported net 1Q profit of $2.47bn, up from $1.45bn in 1Q2017.
Underlying group profit for the quarter increased to $2.47bn, from $1.51bn in 1Q2017, and was BP’s best quarterly result in three years, said CEO Bob Dudley. Upstream profits before interest and tax increased to $3.17bn, up 153%, boosted by higher production and prices; downstream on the same basis was slightly higher, at $1.8bn; while corporate made a $0.4bn loss (same as in 1Q2017).
Oil and gas production was 3.7mn barrels of oil equivalent a day in 1Q2018, 6% higher than in 1Q2017. BP’s upstream production, excluding its 19.75% interest in Rosneft, was 9% higher at 2.605mn boe/d in 1Q018, supported by ramp up of major projects and also the February 2018 start-up of its Atoll gas field in Egypt, ahead of schedule. BP cautioned that its 2Q production this year would be lower, due to the expiry of an Abu Dhabi offshore concession. BP’s average realised price for liquids in 1Q2018 was $61.40/b, up 23% year on year, with natural gas at $3.78/’000 ft3, up 8%.
Sales of gas, LNG and natural gas liquids increased to $5.2bn in 1Q, from $3.84bn in 1Q2017.
Shah Deniz phase two "99% complete"
Five more projects are scheduled to start up this year, said CFO Brian Gilvary, including Clair Ridge in the UK West of Shetland area. He told analysts that gas from BP-led Shah Deniz phase 2 in Azerbaijan is expected to come onstream this year and flow into Turkey, because the project is now 99% complete; ultimately it would flow into Europe (expected 2020), he added.
Since the start of 2018, BP said it has taken Final Investment Decisions (FIDs) on four new projects: Khazzan tight gas phase 2 (Ghazeer) in Oman; KG D6 gas satellites offshore India; and Alligin and Vorlich oil fields offshore the UK. Some of the Ghazeer gas would go into the Omani domestic gas market, said Gilvary, which he said would enhance the Omani venture's economics.
On the Tortue floating LNG project, Gilvary said BP is looking to move forward this year – understood to mean a FID. He said that BP was involved with partners and [Mauritanian and Senegalese] governments on a phase 1 development, which he said may look very different from any subsequent phases. BP has made several provisional contract awards relating to Tortue FLNG, subject to FID.
Gilvary also remarked that BP’s ambition remains to build up a 25mn mt/yr LNG business including equity and contracted volumes, though did not say by when. He said BP is undertaking a fleet rejuvenation programme that would take its fleet up to 16 vessels, including 7 LNG carriers. He said an option to lift from Freeport LNG in the US comes up for exercise in the next 18 months.
BP has a “very gassy” portfolio in the US Lower 48, with 85% gas and 15% liquids, the CFO added, with an opportunity to ramp up or down on rigs on its onshore shale operations.
Net debt at end-March 2018 was $40bn, versus $38.6bn a year earlier.