BP profits boosted by TNK-BP sale in first quarter

Replacement cost (RC) profits at oil heavyweight BP jumped in the first quarter as the company saw a large windfall from its sale in the TNK-BP joint venture.

Replacement cost (RC) profits at oil heavyweight BP jumped in the first quarter as the company saw a large windfall from its sale in the TNK-BP joint venture.

The company posted an RC profit (which strips out the effect of movements in the oil price) of $16.60bn for the first three months of 2013, up from $4.78bn the year before after a net gain of $12.4bn for the disposal of its TNK-BP stake.

Adjusting for this, as well as other non-operating items relating to the Gulf of Mexico oil spill, BP reported an underlying RC profit of $4.2bn in the first quarter, down from $4.6bn in 2012.

Nevertheless, net cash provided by operating activities, including the impact of the Gulf of Mexico spill, rose to $4.0bn from $3.4bn.

Net debt at the end of the period was $17.7bn, down from $31.0bn a year ago, driven primarily by a net cash inflow of $11.8bn from the sale of its interest in Russian oil venture TNK-BP to Rosneft last month. The group gained $15.5bn from the disposal.

Operating cash flow came to $4.0bn, up from $3.4bn in the previous year.

"These strong first-quarter results demonstrate the progress BP is making in delivering the performance milestones that support our 10-point plan and underpin our commitment to material operating cash flow growth by 2014," said Chief Executive Bob Dudley.

A dividend of $0.09 per ordinary share will be paid to shareholders in June.

"The early completion of the sale of our interest in TNK-BP has also allowed us to begin a share buy-back programme which we expect to return up to $8.0bn to our shareholders and reflects the reduction in BP's asset base following our divestment programme over the past three years."

In BP's upstream business, underlying production of oil and gas - adjusted for the impact of divestments and production sharing agreement effects, and excluding TNK-BP and Rosneft - was over 4.0% higher than in the previous quarter as production ramped-up from major projects in Angola and the North Sea.

However, profit before interest and tax fell to $5.5m from $6.9m in the division.

BP said it remains on track for the start-up of four new upstream projects in 2013 and expects to take five final investment decisions during the year.

The firm will drill between 15 and 25 exploration wells by the end of the year in Egypt, India, Jordan, Gulf of Mexico, and Indonesia.

Production in the second quarter is expected to be lower as a result of planned seasonal turnaround activity concentrated on higher-margin assets in the Gulf of Mexico and the North Sea, together with the ongoing impact of divestments.

RD

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