While some oil producers, especially in countries like Canada, are struggling to keep their operations afloat, many others are showing strong signs of growth. British Petroleum (LON: BP) revealed its financial results, showing stronger than expected returns as the company doubled their profits in 2018 to levels not seen in five years.
Other major oil producers such as Exxon Mobil (NYSE: XOM), Royal Dutch Shell (AMS: RDSA), and Chevron (NYSE: CVX) all reported stronger-than-expected earnings last week which was largely backed by higher production in U.S. shale basins, an area major producers have invested billions in over the past few years.
These strong financial gains came despite the significant drop in crude oil prices during the end of 2018. Many analysts expect Brent crude prices to stay around the same level of $60 a barrel during 2019, while demand is expected to rise slightly by an extra 100,000 barrels per day.
“We now have a powerful track record of safe and reliable performance, efficient execution and capital discipline. And we’re doing this while growing the business,” Chief Executive Officer Bob Dudley said in a statement according to Bloomberg. “Our strategy is clearly working.”
Additionally, BP plans to sell over $10 billion in assets over the next couple of years to help pay for various land deals, as well a few fields in the U.S. Other oil companies, such as Husky Energy, have made significant operational shifts, selling their network of hundreds of retail outlets as the company shifts to other revenue streams.
BP’s profit increased to a five-year high of $12.7 billion, which is double the previous year’s $6.2 billion as well as above the $11.9 billion analysts expected the oil giant to report. “Overall, we see this as a strong set of results, with stronger underlying earnings translating into cash,” said RBC Capital Markets analyst Biraj Borkhataria.
“Given the complexity of the operation, BP has the ongoing challenge of keeping the overall engine purring. This has been done with some aplomb, and any number of the metrics have benefited not only from a generally higher oil price over the year, but also a streamlining of operations which has resulted in higher efficiency,” added Richard Hunter of Interactive Investor. “This in turn means that the company estimates that it can continue to be comfortable with oil around $50 per barrel, although it has also run the slide rule over lower levels by way of contingency planning.”
In response to the news, shares of BP were up 2 percent, a significant movement for a company as well established and mature as BP.
British Petroleum Company Profile
BP p.l.c. engages in energy business worldwide. It operates through three segments: Upstream, Downstream, and Rosneft. The Upstream segment is involved in the oil and natural gas exploration, field development, and production; midstream transportation, storage, and processing; and marketing and trading of liquefied natural gas (LNG), biogas, power and natural gas liquids (NGLs).
This segment also engages in the ownership and management of crude oil and natural gas pipelines; processing facilities and export terminals; and LNG processing facilities and transportation, as well as in NGLs processing business. –Yahoo Finance