BP share price: Group's annual profits surge as oil price recovers

BP's profits were boosted mostly by a recovery in the crude oil market

Underlying replacement cost profit was $2.1B for Q4 and $6.2B for the full year, compared with $400M and $2.6B for the year-ago quarter and FY 2016, respectively.

BP is "operating and firing on all cylinders", CEO Bob Dudley says after the company reports better than expected Q4 earnings and revenues.

"The company's ability to generate cash remains prodigious".

Besting its oil brethren is especially important for BP.

BP's fortunes and reputation were left in tatters after the explosion at the Deepwater Horizon drilling rig killed 11 men off the coast of Louisiana, causing 134 million gallons of oil to spew into Gulf waters and triggering the worst environmental catastrophe in U.S. history. As of October it had managed just USD1.0 billion in divestments, but achieved USD2.5 billion in the fourth quarter overall.

The British supermajor is the latest out with fourth quarter earnings that have so far disappointed investors. Upstream production, excluding BP's share of Rosneft production, was 12 percent higher than 2016, the highest since 2010.

Those companies' failure to fully capitalize on the recovery in global energy markets underscores the complexity of their business model.

Oil companies have been boosted by the rising price of crude oil.

Fourth-quarter oil and gas production rose 18 percent from a year earlier to 2.58 million barrels of oil equivalent a day.

There's no guarantee that the cost of the Deepwater Horizon disaster won't rise again, but it will be entirely manageable from cash flow this year and next, Chief Financial Officer Brian Gilvary said by phone. Despite pledging $50 billion in investments in USA shale oil over the next five years, Exxon Mobil in particular disappointed the market last week as a multi-billion dollar benefit from a US tax overhaul masked some underlying weakness. The company is back to breaking even at current oil prices, but will still maintain capital discipline and plans divestments of between $2 billion and $3 billion in 2018, he said.

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