BP said it’s generating so much cash at the moment that, provided oil prices remain around their current range, the company will pay for its $10.5 billion acquisition of BHP Billiton Ltd.’s onshore U.S. oil and gas assets entirely in cash.
Profits at oil giant BP more than doubled in the third quarter of 2018, boosted by stronger oil prices and higher production from new oil fields.
Profits rose to $3.8 billion from $1.86 billion a year earlier, its best quarterly result in five years. Revenue in the July-to-September quarter jumped to $80.8 billion, up from $60.8 billion last year.
“We’re very confident in the outlook for the company,” Brian Gilvary, chief financial officer said. “The oil price is currently north of $75; we break even at $50. We have more than sufficient surplus cash.”
When the deal was announced in July, BP had planned to fund 50 percent of the purchase through equity, however, the deal is expected to complete the BHP transaction Wednesday.
Years of cost-cutting caused by the slump in oil prices are beginning to pay dividends for the industry’s giants as the market rebounds. But investors remain skeptical, making solid delivery on results crucial for companies like BP.
It’s also closing in on its ambition to return to production levels last seen before the company’s fatal incident in the Gulf of Mexico eight years ago. To pay for the disaster, which killed 11 people and caused the worst offshore oil spill in U.S. history, BP sold off billions of dollars of assets, shrinking its production. In addition to its acquisition of BHP’s assets, BP has also started production from two new major projects this month.
“The key focus is growing the company,” Gilvary said. “We laid out a program for 2021 with growth targets. We’re ahead of those targets.”
Last week, French oil giant Total and Norway’s Equinor formerly known as Statoil both announced a sharp increase in earnings for the third quarter, while continuing to emphasize their commitment to control spending and grow production.
Frontpage September 3, 2020