BP moves back into the black, lowers cash break-evens

BP moved back into the black during the second quarter of 2017 thanks to an improved performance in its upstream arm with the firm having lowered its cash break-even level to $47 per barrel of oil.

The oil major swung from a replacement cost loss of -$2.25bn one year ago to a profit of $553m over the three months to June.

Within that, replacement cost profits at its upstream division reached $710.0m, versus just $29.0m seen in the same period of 2016.

However, on an underlying basis, after tax RC profits in fact fell, from $720.0m in the year-ago quarter to $684.0m as the company's interest rate burden and tax payments increased - especially the latter.

In the company's results statement, management opted to highlight the production growth of 6% seen in the first six months of 2017, alongside a reduction of 18% in its unit operating costs.

As well, during the first half of 2017 BP was cash break-even at $47 per barrel of oil, finance chief Brian Gilvary emphasised in remarks to Bloomberg.

Net debt at period-end stood at $39.8bn, up from $30.9bn one year back, for an increase in its ratio of net debt from 24.7% to 28.8%.

According to Gilvary, payments linked to the 2010 Gulf of Mexico oil spill disaster were the main cause of the increased debt.

Yet the company's debt pile was expected to reduce in the second half of 2017 as the associated compensation payments slowed down and proceeds from its divestment plan began to flow in.

BP also said it was on track to increase its output of oil by 800,000 barrels a day by 2020, with three new projects having already come online during 2017.

Operating cash flows at BP, excluding the impact of the Gulf of Mexico oil spill, was at $6.9bn at quarter-end, up from $5.3bn.

Including the related post-tax amounts cash flows were at $4.9bn, versus $3.9bn a year-ago.

The quarterly dividend per share was kept at $0.10.

"Fortunately the group’s Upstream division has delivered a strong set of numbers this time out, and while the Downstream refining business hasn’t delivered the growth we’ve seen from the likes of Shell, it remains robustly profitable. Gulf of Mexico costs are expected to fall from here, but BP remains a bit of a waiting game," said Laith Khalaf, senior analyst at Hargreaves Lansdown.

As of 0855 BST, shares of BP were 3.04% higher to 457.15p.