Earnings

BP first-quarter profits slip despite oil price recovery

Key Points
  • BP posted first-quarter underlying replacement cost profit, used as a proxy for net profit, of $2.4 billion, versus $2.3 billion expected in a Reuters poll.
  • That compared with a profit of $2.6 billion a year earlier and $3.5 billion in the final three months of 2018.
  • Shares of BP rose almost 1 percent during morning deals.
VIDEO4:0104:01
BP CFO: First-quarter results resilient considering market environment

BP reported first-quarter profit largely in line with expectations on Tuesday, citing tough market conditions at the start of the year.

The British oil giant posted first-quarter underlying replacement cost profit, used as a proxy for net profit, of $2.4 billion, versus $2.3 billion expected in a Reuters poll. That compared with a profit of $2.6 billion a year earlier and $3.5 billion in the final three months of 2018.

It marks the first significant setback in BP's steady recovery over the past 18 months.

"It was a pretty resilient set of results actually given the environment we came into at the start of the year," Brian Gilvary, chief financial officer at BP, told CNBC's "Squawk Box Europe" on Tuesday.

Gilvary said the three-month period through to March had been particularly "tough" because of adverse weather conditions, assets being put out of action and lower oil prices in January.

"I think oil prices look pretty firm given where we are today but we are going to continue to maintain capital discipline," he added.

Shares of BP rose almost 1% during morning deals.

VIDEO2:3702:37
BP CFO: Oil demand robust but supply facing 'significant discipline'

Profits from refining and retail operations, known as downstream, tumbled by around 20% amid weaker margins and narrower discounts of heavy crude oil.

But, the London-based firm said this was partially offset by stronger results from its oil and gas trading operations.

Oil prices

The results coincided with a significant recovery in oil prices through the first three months of the year. International benchmark Brent crude and U.S. West Texas Intermediate (WTI) have risen by approximately 33% and 40% year-to-date.

The value of a barrel of Brent crude stood at $71.82 Tuesday morning, while WTI traded at $63.43.

Stateside, Chevron and Exxon Mobil both reported larger-than-expected falls in profits over the first three months of the year, amid weak U.S. gasoline prices.

Meanwhile, France's Total also registered a drop in profits. Royal Dutch Shell is due to report its latest quarterly earnings on Thursday.