BP profit surges as it hikes dividends for first time since 2014

  • BP said Underlying replacement cost (RC) profit, a proxy for net income, for the second quarter was $2.8 billion, quadruple the figure for the same period in 2017.
  • The dividend was increased by 2.5 percent to 10.25 cents a share, the first time a hike has happened since the third quarter of 2014.
  • Production for the quarter was 3.6 million barrels a day.

BP's profit surged in the second quarter of 2018 and the oil giant hiked its dividend for the first time in four years.

Underlying replacement cost (RC) profit, a proxy for net income, for the second quarter was $2.8 billion, quadruple the figure for the same period in 2017 and exceeding forecasts of $2.7 billion, according to a company-provided survey of analysts.

The dividend was increased by 2.5 percent to 10.25 cents a share, the first time a hike has happened since the third quarter of 2014.

BP chief executive Bob Dudley spoke exclusively to CNBC's "Squawk Box Europe" Tuesday to discuss the company's forward momentum.

"We changed our strategic direction six quarters ago, this is the sixth quarter in a row we've been at or above expectations. The company's got momentum, it feels good," Dudley said, referencing several new projects driving the company's progress.

BP brought on seven major projects in 2017, as well as three that have been brought online this year in Russia, Egypt and Azerbaijan and another three to go before the year's end.

Robert 'Bob' Dudley, chief executive officer of BP Plc.
Christophe Morin | Bloomberg | Getty Images
Robert 'Bob' Dudley, chief executive officer of BP Plc.

"That gave us the confidence to raise the dividend this year for the first time in 15 quarters, as well as some great assets in North America," Dudley said.

Production for the quarter was 3.6 million barrels a day (bpd) and upstream production, excluding Rosneft, was up 1.4 percent on the previous year. The company credited rising output from major projects as driving much of the rise.

The earnings beat comes against the backdrop of higher crude prices as rising geopolitical risks in the Middle East, the crisis in Venezuela and a heavy crude outage in Canada help support oil markets.

Oil rose above $70 a barrel again on Monday. Brent crude was trading above $75 per barrel on Tuesday. But Dudley said that the company is planning for a lower oil price despite the recent rise.

"You look at the oil price — we're planning BP on $50 to 65 a barrel," the BP CEO said. "That's how we're going to plan the company, we're not going to get ahead of ourselves, we're going to keep the capital discipline ... We'll probably be at the low end of that this year, yet you do see pricing and revenues coming through stronger because of the markets."

The results come after BP announced the acquisition of BHP Billiton's shale assets for $10.5 billion, which it says will beef up its U.S. business and increase earnings and cash per share. The company plans to return sale funds to shareholders and plans a $5 to $6 billion share buyback.