BP profits double as oil production picks up pace

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BP has more than doubled profits in the third quarter after securing a 14% jump in oil and gas production.

The oil major said underlying replacement cost (RC) profit - the market's preferred measure - rose to 1.9 billion dollars (£1.44 billion) over the three-month period, up from 684 million dollars (£603 million) for the same quarter last year.

On a nine-month basis, underlying RC profits also climbed to 4.1 billion dollars (£3.1 billion) in contrast to 2.2 billion dollars (£1.7 billion) for the period in 2016.

Shares in the firm rose more than 3%, hitting a seven-year high during morning trading on the London Stock Exchange, as earnings beat expectations.

It added that oil and gas production during the third quarter rose to an average of 3.6 million barrels of oil per day after it launched a number of new projects.

BP, which has been reshaping its business in order to cope with long-term low oil prices, also announced a share buyback scheme for the fourth quarter.

The update comes amid brighter outlook for global oil giants after the price of Brent crude lifted above 60 dollars a barrel for the first time in two years last week.

Group chief executive Bob Dudley said: "We are steadily building a track record of delivering on our plans and growing across our businesses.

"This quarter, three new upstream projects and the highest downstream earnings in five years, underpinned by reliable operations and disciplined spending, have generated healthy earnings and cash flow.

"There is still room for further improvement and we will keep striving to increase sustainable free cash flow and distributions to shareholders."

The oil giant is currently hunting for a new chairman after it announced in October that Carl-Henric Svanberg would step down next year.

His appointment came shortly before the Deepwater Horizon disaster in April 2010, which is widely regarded as one of the biggest disasters in corporate history - killing 11 people and leading to a record US environmental fine of 18.7 billion (£14.2 billion).

While the lion's share of the mammoth costs are behind the firm, BP said Gulf of Mexico oil spill payments came in at 600 million dollars (£454 million) in the third quarter.

It said full-year payments linked to the disaster would be around 5.5 billion dollars (£4.2 billion).

Nicholas Hyett, equity analyst at Hargreaves Lansdown, said: "BP has spent the past seven years addressing big problems, with first the Gulf of Mexico disaster and then the oil price crash throwing the group into disarray.

"Those headwinds are finally fading into the history books.

"Gulf payments are still soaking up mind-boggling quantities of cash, but are finally starting to recede.

"New oil fields are starting to come online, supporting cash generation from the group's upstream business.

"Meanwhile, the downstream business, which has been BP's rock throughout much of the oil downturn, continues to deliver excellent results.

"The share buyback programme is the first bone for investors from those improvements."