UK supermajor BP beat analysts’ forecasts, booking a 48% surge in first-quarter replacement cost net income on the back of record oil prices.
Excluding non-operating items, which amounted to a net gain of $96 million, the replacement cost result, which strips out the impact of changes in the value of fuel inventories, was $6.49 billion.
A Reuters poll of analysts gave an average forecast of $5.31 billion for BP’s first quarter replacement cost earnings.
The supermajor, headed by Tony Hayward, said production averaged 3.913 million barrels of oil equivalent per day in the first three months of the year, flat on the same period last year and in line with analysts’ forecasts.
Output would have risen 5%, BP said, if it were not for the production sharing contracts it has with resource-holders, which reduce the amount of oil BP receives from projects when oil prices rise.
BP’s refining and marketing division turned in an unexpected profit, despite lower crude processing margins and lower throughputs at its refineries. Many analysts had expected a loss.
BP is undergoing a restructuring to simplify its corporate structure and cut costs, in an effort to address industry-lagging operational performance and falling output.
A BP spokesman cautioned that the strong first-quarter earnings did not necessarily represent BP’s return to form, saying the results were flattered by a number of unusual items including BP’s oil and gas traders having a lucky quarter.
“All the trading activity has gone in our favour in this quarter. This has probably contributed $400 million above a typical result,” he said.
A deferral of tax charges in Russia also boosted the bottom line by around $200 million while corporate overheads also took a $250 million dip which is unlikely to be repeated, the spokesman said.