BP reports higher earnings helped by recovery in oil prices

This time last year, BP reporting an 80 per cent drop in profits in the first quarter, having posted its biggest annual loss for 2015 ever

First quarter operating cash flow, not taking into account payments relating to the Gulf of Mexico oil spill, came in at $4.4bn, up from $3bn for the same period last year (Reuters)

Shares in BP rose on Tuesday after the energy giant beat analysts' earnings forecasts for the first quarter of 2017, largely spurred by oil prices recovering from one of their worst slumps in history.

The company reported underlying replacement cost profit, the measure which it uses to determine net income, of $1.5bn (£1.17bn), overshooting an average forecast of $1.26bn in a Reuters poll. That sent shares up around 2 per cent in early trading on the FTSE 100.

First quarter operating cash flow, not taking into account payments relating to the Gulf of Mexico oil spill, came in at $4.4bn, up from $3bn for the same period last year. Including those payments, operating cash flow hit $2.1bn, an improvement from $1.9bn last year.

"Our year has started well,” said chief executive Bob Dudley.

The price of oil has been a drag on BP’s earnings in recent years. In 2014, a global oil glut sent Brent crude tumbling from above $100 a barrel to around $50. It slipped further throughout 2015, hitting less than $40 a barrel in early 2016 – a 13-year low – but was around 35 per cent higher during the first quarter of this year than during the same period of 2016.

This time last year, BP reporting an 80 per cent drop in profits in the first quarter, having posted its biggest annual loss for 2015 ever, as a result of slumping oil prices and costs related to the settlement of a the Gulf of Mexico spill, which killed 11 workers and spilt millions of barrels of oil into the sea in April 2010.

On Tuesday, the company said that it was leaving its dividend unchanged at 10 cents per share.