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Despite Higher Profits, BP Disappoints With Q1 Cash Flow

Dudley BP

BP reported lower than expected cash flow for the first quarter of the year, disappointing investors despite the fact that the figure was 22 percent higher than in Q1 2017, at US$5.4 billion, excluding payments related to the Deepwater Horizon disaster.

This was, however, much lower than the cash flow position of the company in the previous quarter. It was also about a billion dollars lower than analysts’ expectations.

Net profits came in at US$2.6 billion thanks to higher oil prices and more barrels being pumped, a 71-percent annual increase.

BP produced 3.7 million barrels of oil equivalent daily in the first quarter, a 6-percent increase on the year, which also contributed to the robust financial results. Still, the supermajor decided to leave dividend unchanged at US$0.10 per share and continue with its share buybacks launched when oil prices began to improve to reassure investors the worst is over.

BP has had a tougher going than its peers because of the multibillion-dollar bill it was saddled with after the Deepwater Horizon explosion in 2010 and the resulting massive oil spill in the Gulf of Mexico. It is still paying on it, and it will continue to pay for several more years, but as oil prices improve so has BP’s outlook for the future.

Related: Expert Analysis: Is This The End Of The Iran Deal?

The company has also demonstrated that despite the general wariness in the industry, the supermajors are investing in new production: in the last quarter, BP made a final investment decision on four new projects—two in the UK portion of the North Sea, one in India, and one in Oman.

Still, what investors are watching most closely is cash flow, as this is what pays the bills in oil and gas, not net profits that some observers have aptly noted can be adjusted to suit the reporting company’s needs. Unlike profits, cash flows usually don’t lie and are seen as a more reliable indicator of a company’s health.

By Irina Slav for Oilprice.com

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  • mike on May 01 2018 said:
    wonder if anyone ever calls into question "the analysts" it always surprises me when someone who does not, or has not worked in the industry, is predicting what a companies earning should be.
  • mike on May 01 2018 said:
    wonder if anyone ever calls into question "the analysts" it always surprises me when someone who does not, or has not worked in the industry, is predicting what a companies earning should be.

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