BP and Total beat analysts’ predictions by reporting better than expected results this morning, despite consistently low oil prices.
French oil major Total saw its fastest production growth in more than a decade and gains in its refining business helped offset the low oil prices being met by the upstream business.
Despite the Brent crude price dropping 50% between 1Q 2014 and 1Q 2015, Total says its adjusted net results were US$2.6 billion – a 22% decrease over the same period. The firm says production has increased and positive results were being seen from its cost reduction program.
UK-based oil major BP also saw earnings from refining and trading offset lower crude prices.
“We are resetting and rebalancing BP to meet the challenges of a possible period of sustained lower prices. Our results today reflect both this weaker environment and the actions we are taking in response,” said Bob Dudley, BP group chief executive. “We are continuing to progress our planned divestment program, we are resetting our level of capital spending, and we are addressing costs through focusing on simplification and efficiency throughout BP.”
BP’s production for 1Q was 2.3 MMboe/d, 8.3% higher than 1Q 2014. 2Q production is expected to drop as significant seasonal turnaround and maintenance activity starts, primarily in the Gulf of Mexico.
Profit adjusted for one-time items and inventory changes dropped 19% from a year earlier to $2.6 billion, BP said.
In 1Q, BP announced the Atoll gas discovery and also signed final agreements for the major $12 billion West Nile Delta gas project, both offshore Egypt. On 23 April, BP also announced the sale of its equity in the Central Area Transmission System (CATS) business in the UK North Sea to Antin Infrastructure Partners for $486 million as part of its divestment program. The sale is expected to complete before the end of 2015.
For Total, net income in the quarter fell to $2.66 billion, or $1.13 a share, from $3.34 billion, or $1.46, Total said.
Total’s production was 2.3 MMboe/d in 1Q, up 10% compared to 1Q 2014. Total saw its CLOV development offshore Angola ramp up to above plateau, as well as the start ups of West Franklin Phase 2 in the UK North Sea, Eldfisk II in the Norwegian North Sea and Ofon Phase 2 in Nigeria. Total also entered a new ADCO concession in Abu Dhabi. The firm, like BP, has also continued asset sales, including several fields onshore Nigeria.
In 2015, Total will see further start ups – including the onshore Russia Termokarstovoye gas field, Gladstone LNG in Australia, Laggan Tormore in the UK North Sea, Surmont 2 onshore Canada and Vega Pleyade offshore Argentina.
However, Total also warned of increasing geopolitical tensions, particularly in Yemen and Libya, where onshore production was halted in April and February, respectively.
Subscribe
