BP’s third-quarter profits rose to a five-year high, boosted by higher oil prices as the $10.5 billion acquisition of BHP Billiton’s U.S. shale business was set to complete this week.
BP reported on Tuesday that profit had more than doubled in the third quarter. Underlying replacement cost profit, the company’s definition of net income, rose to $3.8 billion, far exceeding forecasts of $2.85 billion based on a company-provided survey of analysts.
That compared with a profit of $1.86 billion a year earlier and $2.8 billion in the second quarter of 2018.
“Operations are running well across BP and we’re bringing new, higher-margin barrels into production faster through efficient project execution,” Chief Executive Officer Bob Dudley said in a statement.
Oil and gas production for the first nine months of the year increased to 2.5 million barrels of oil equivalent per day (boed) and was set to rise further with the expected completion of the $10.5 acquisition of BHP’s U.S. shale business on Oct. 31, BP said.
In a further sign of confidence, BP said it now expected to fully fund the BHP acquisition from available cash without resorting to a rights issue as planned.
The rise in oil prices over the past year to their highest since late 2014 has boosted revenue for oil companies such as BP. Coupled with deep cost cuts and stricter spending since the 2014 downturn, the sector has enjoyed rapid growth in profits.
BP launched nine major oil and gas fields over the past year, including in Azerbaijan, Oman, Egypt and Angola that will help boost production by 900,000 barrels of oil equivalent per day (boed) by 2021. Most of the production will be gas.