LONDON (Reuters) - British oil major BP Plc <BP.L> beat forecasts on Tuesday with a 48 percent leap in first-quarter profits to $6.6 billion, helped by record oil prices and strong profits from punting energy markets.
By Tom Bergin
LONDON (Reuters) - British oil major BP Plc <BP.L> beat forecasts on Tuesday with a 48 percent leap in first-quarter profits to $6.6 billion, helped by record oil prices and strong profits from punting energy markets.
The results raised investor hopes Chief Executive Tony Hayward's restructuring of the world's third-largest non government-controlled oil company by market capitalization was working effect, pushing BP's shares up over 4 percent.
"The figures are very good," Tony Shepard, oil analyst at Charles Stanley said.
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The main driver of BP's earnings was its core oil and gas production unit, which benefited from oil prices which broke the $100/barrel barrier in the quarter, although output was flat at 3.913 million barrels of oil equivalent per day (boepd).
Output would have risen 5 percent, BP said, if it were not for the production sharing contracts it has with resource-holders, which reduce the amount of oil BP receives from projects when oil prices rise.
BP's refining and marketing division turned in an unexpected $1.2 billion profit, despite lower crude processing margins and lower throughputs at its refineries.
Many analysts had expected a loss but a strong result from marketing aviation fuel and lubricants helped the company.
BP has underperformed rivals in recent years with delays on some key projects, fatal refinery accidents, oil leaks and U.S. investigations into its energy trading activities.
Hayward has been cutting management layers to improve delivery on projects, simplify decision-making and reduce costs.
However, a BP spokesman cautioned that the strong first-quarter earnings did not mean BP had completed its return to form, saying the results were flattered by a number of unusual items including BP's oil and gas traders having a lucky quarter.
"All the trading activity has gone in our favor in this quarter. This has probably contributed $400 million above a typical result," he said.
A deferral of tax charges in Russia also boosted the bottom line by around $200 million while corporate overhead costs also took a $250 million dip which is unlikely to be repeated, the spokesman said.
BP shares traded up 4.3 percent at 603-1/2 pence at 0724 GMT, outperforming a 2.4 percent rise in the DJ Stoxx European oil and gas sector index <.SXEP>.
BP's $6.59 billion first quarter replacement cost profit, which strips out the impact of changes in the value of fuel inventories, included a net non-operating gain of $96 million.
The "clean" RC result, the figure judged by analysts to be the best measure of underlying performance, was $6.49 billion, ahead of an average forecast of $5.31 billion from a Reuters poll of 9 analysts.
(Additional reporting by Catherine Hornby in Amsterdam)
(Editing by Louise Ireland and Erica Billingham)
