BP CEO Bob Dudley hails 'best earnings in recent history' as profits surge

  • BP posted fourth-quarter underlying replacement cost profit, used as a proxy for net profit, of $2.1 billion, beating analysts' projections of $1.9 billion.
  • "This is the best earnings we have had in recent history," BP CEO Bob Dudley told CNBC.
  • In recent quarters, major oil companies have been eager to show investors that progress has been made when it comes to covering spending and dividends with cash generation.

Oil major BP beat earnings expectations on Tuesday, highlighting a surge in refining and trading during the final three months of 2017.

"This is the best earnings we have had in recent history... All of the businesses are firing on all cylinders," CEO Bob Dudley told CNBC on Tuesday.

The oil giant posted fourth-quarter underlying replacement cost profit, used as a proxy for net profit, of $2.1 billion, beating analysts' projections of $1.9 billion.

'Not planning on $70 a barrel'

On a yearly basis, BP's profits more than doubled to $6.2 billion in 2017, up from $2.6 billion in 2016.

Meanwhile, full-year production rose 2.47 million barrels per day in 2017, soaring 12 percent when compared to 2016.

BP's latest figures come amid a rapidly improving environment for big energy firms, with oil prices skyrocketing 50 percent since the middle of last year. International benchmark Brent crude has recovered strongly in recent months and reached a multi-year high of $70 a barrel last month.

There are also signs the oil market is rebalancing, particularly as allied producers continue with an agreement to limit output.

BP became the first European oil and gas company to resume share buybacks after a three-year downturn Tuesday. The move is a clear signal of improving sentiment for the oil major, after a slump in oil prices and as it tackles a $65 billion bill for penalties and clean-up costs linked to the deadly 2010 Deepwater Horizon spill.

The company also said it had launched seven new oil and gas fields in 2017 and is poised to inaugurate five additional projects in 2018.

Brent crude traded at $67.07 a barrel at around 7:45 a.m. London time, down 0.8 percent, while U.S. crude was seen at $63.62, down 0.86 percent.

Dudley said a rally in oil prices to more than $70 a barrel at the start of 2018 "felt a little bit high," before adding: "We're not planning on $70 a barrel. We're going to plan our year on $55 to $60, roughly, and if is higher we'll more than deliver on our promises."

Some 'really rough years'

In recent quarters, major oil companies have been eager to show investors that progress has been made when it comes to covering spending and dividends with cash generation. The price of oil collapsed from near $120 a barrel in June 2014 due to weak demand, a strong dollar and booming U.S. shale production and firms were forced to wrestle with their portfolios in order to try and become more competitive.

Dudley said that while several oil majors had experienced some "really rough years" in recent times, he believed the energy industry had returned to a "healthy" state.

BP's shares were around 0.5 percent lower during mid-morning deals.

On Thursday, Shell reported profits had more than doubled in the fourth quarter of 2017, supported by a recent rally in oil and gas prices. The Anglo-Dutch firm said the past 12 months had been a "year of transformation" for the oil company.