LONDON (Alliance News) - Oil major BP PLC on Tuesday reported a particularly strong second quarter from its Upstream division, while it also hailed the performance of its Downstream division and the contribution from its investment in Russia's Rosneft.
BP shares were 0.8% higher on Tuesday morning at 569.40 pence apiece.
The FTSE 100-listed company said Upstream had its strongest quarter since the third quarter of 2014, on both an RC and underlying basis.
Upstream's RC profit was USD3.51 billion for the second quarter of 2018, more than the entire first half of 2017, and significantly higher than the USD795 million recorded a year prior.
On an underlying basis, RC profit in the segment multiplied in the second quarter to USD3.51 billion from USD710 million.
For the first half, Upstream production was 2.5 million barrels of oil equivalent a day, excluding BP's stake in Russian firm Rosneft, 5.2% higher year-on-year. In the second quarter, Upstream production rose 1.4% year-on-year to 2.5 million barrels of oil equivalent per day.
Looking to the third quarter of 2018, BP expects Upstream output to be broadly flat on the second quarter figure due to the continued seasonal turnaround and planned maintenance work.
BP has begun a number of major new projects so far this year, in Azerbaijan, Russia, and Egypt, and it still has another three in the pipeline for 2018 set to further boost output.
In Azerbaijan, it started the Shah Deniz 2 gas project, in Russia the Taas-Yuryakh expansion, and in Egypt the Atoll project, all of which were delivered under budget and on or ahead of schedule, BP said.
The second-quarter results come just a few days after BP's announced a major acquisition in the US, a region where its reputation has suffered badly in recent years due to the 2010 Deepwater Horizon explosion and oil spill.
Last Friday, BP said it has agreed to buy FTSE 100-listed miner BHP Billiton PLC's US shale assets for USD10.5 billion, to be funded 50/50 in cash and equity.
Following the US shale deal, BP will sell between USD5 billion and USD6 billion of assets, mainly from its Upstream business. Divestments totalled USD300 million in the first half of 2018, compared to USD700 million a year earlier.
Downstream RC profit fell to USD840 million in the recent quarter from USD1.57 billion a year ago, and in the year so far it has declined to USD2.55 billion from USD3.27 billion.
On an underlying basis, however, second-quarter RC profit climbed marginally to USD1.46 billion from USD1.41 billion and for the six month period to June to USD3.28 billion from USD3.16 billion.
On the manufacturing side in the Downstream business, BP said the Whiting refinery, a 1,400 acre site on the shore of Lake Michigan near Chicago, processed a record quarterly level of crude.
In the third quarter of the year, BP expects lower industry refining margins as well as "significantly" higher turnaround activity during the second half, especially at Whiting.
Rosneft was another positive for BP - its second-quarter RC profit soared to USD766 million from USD279 million, and in the year-to-date is up to USD1.01 billion from USD378 million.
Production in total for the second quarter from Rosneft, net to BP, was 1.1 million barrels of oil equivalent a day, broadly flat year-on-year, as is the year-to-date figure which is also 1.1 million barrels of oil equivalent a day.
BP owns just short of 20% of the Moscow-based energy company's shares.
Turning to BP as a whole, for the six months to June BP's RC profit came in at USD4.18 billion, up from USD1.97 billion in the same period a year prior. On an underlying basis, the figure was USD5.41 billion, up from USD2.19 billion.
In the second quarter of 2018, RC profit was USD1.79 billion from USD553 million a year before and on an underlying basis was USD2.82 billion from USD684 million.
The increase, driven by higher oil prices, comes after peer Royal Dutch Shell PLC on Thursday last week announced a similar sharp rise in quarterly earnings, though it did miss expectations.
Shell posted current costs of supplies earnings attributable to shareholders of USD5.23 billion for the three months to June, up from USD1.92 billion a year prior, but the figure was short of analyst consensus of USD5.96 billion.
BP posted revenue of USD143.61 billion for the six months to June, up 28% from USD112.37 billion a year prior.
BP last week announced its second quarterly dividend would rise 2.5% to 10.25 US dollar cents, the first time it had increased the figure since the third quarter of 2014.
This first shareholder payout rise for four years comes after Shell announced a USD25 billion share buyback up until 2022, though it did keep its own quarterly dividend flat at 47 cents a share.
BP's entire group production for the half, including its share of Rosneft's output, was 3.7 million barrels of oil equivalent a day, up 3.3% year-on-year, while in contrast Shell's first-half production was flat at 3.6 million barrels of oil equivalent a day.
Net debt at the end of the half was marginally lower, by USD700 million, to USD39.3 billion while it bought back USD200 million worth of shares over the six months.
Commenting, Chief Executive Bob Dudley said: "We continue to make steady progress against our strategy and plans, delivering another quarter of strong operational and financial performance.
"We brought two more major projects online, high-graded our portfolio through acquisitions such as BHP's US onshore assets and invested in a low-carbon future with the creation of BP Chargemaster."
He added: "Given this momentum and the strength of our financial frame, we are increasing our dividend for the first time in almost four years. This reflects not just our commitment to growing distributions to shareholders but our confidence in the future."
BP (BP.)