Business

BP rewards shareholders as outlook brightens

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BP underlined its confidence in the future as it posted better than expected third quarter results days after the oil price topped $60 for the first time since 2015.

The energy giant, a staple among many UK pension funds, announced a share buyback to reward long-suffering investors battered by the collapse in the market in recent years.

Shares opened more than 3% higher.

Replacement cost profit for the third quarter fell 17% compared to the same period last year to $1.38bn (£1.04bn) due to accounting charges and one-off costs.

These included a $145m write-off of some assets in the Gulf of Mexico as well as an additional $84m to cover costs from the deadly Deepwater Horizon blow-out in 2010 – a disaster which has so far cost BP $63.4bn.

But underlying profits, stripping out these one-off costs, rose 9% to $1.77bn.

BP, like the rest of the industry, has been battered by the collapse in the oil market amid a combination of weak demand and a glut of supply.

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That saw the price of a barrel of Brent crude sink from a peak of more than $100 to $27 early in 2016 and thousands of jobs axed in the North Sea and across the industry.

But the price has since recovered steadily with major oil producing nations agreeing to curb supply, and the price topped $60 last week on signs the deal would be extended.

BP's finance director Brian Gilvary said it had made "strong progress this year in adjusting to the lower oil price environment" and has brought its finances into "organic balance at an oil price just below $50 a barrel".

He added: "Given the momentum we see across our businesses and our confidence in the outlook for the group's finances, we will be recommencing a share buyback programme this quarter."

Share buybacks reward shareholders by reducing the number of outstanding shares, increasing the earnings per share and the market value of those remaining.

Chief executive Bob Dudley said: "We are steadily building a track record of delivering on our plans and growing across our businesses."

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