LONDON, Oct 31 (Reuters) - BP said on Tuesday it will resume share buybacks after reporting a doubling in third-quarter profit in the clearest sign yet that the oil company is confident about a turnaround in a week when oil prices hit a two-year high above $60 a barrel.
BP said it was able to balance its cashflow in the first nine months of the year, excluding large payments for the settlement of the 2010 Deepwater Horizon spill, at $49 a barrel as years of costs cuts pay off.
The profit growth was driven by a recovery in earnings from oil and gas production after BP started six major projects so far this year as well as from the downstream segment where refinery profit margins rose sharply after Hurricane Harvey knocked out around one quarter of the U.S. refininig capacity for several weeks.
BP said it will start buying back shares in the fourth quarter in order to offset the dilutive effect of the scrip dividend programme, when investors can receive dividend payouts with cash and shares.
BP reported third-quarter underlying replacement cost profit, the company's definition of net income, of $1.87 billion, exceeding analysts' forecasts of $1.58 billion.
That doubled a profit of $933 million a year earlier and $684 million in the second quarter of 2017, when the company took a large writedown on exploration.
"Given the momentum we see across our businesses and our confidence in the outlook for the group's finances, we will be recommencing a share buyback programme this quarter," Chief Financial Officer Brian Gilvary said. (Reporting by Karolin Schaps and Ron Bousso; editing by Jason Neely and Louise Heavens)