BP profit beats expectations on strong refining

Refining revenues offset poor earnings from oil production division

Oil major BP reported higher than expected profit on Tuesday thanks to a hefty increase in refining revenues that offset poor earnings from its oil production division.

The company reported first-quarter underlying replacement cost profit of $2.58 billion, against expectations of $1.28 billion. That was down nearly 20% from the same period last year but up 15% from the fourth quarter of 2014.

BP said it is maintaining the dividend at 10 cents per share.

"The dividend is the first priority within our financial framework and the board is committed to maintaining it, as we have today," Chief Executive Bob Dudley said in a statement.

"We can sustain this by successfully resetting our capital and cost base and rebalancing our sources and uses of cash in the prevailing oil price environment. We will continue to review progress on this as we move through the year."

BP's oil production division reported underlying pre-tax replacement cost profit of $0.6 billion, down from $4.4 billion a year ago. The result included a $545 million loss for BP's US upstream business.

"Upstream result was significantly affected by lower oil and gas prices as well as weaker gas marketing and trading and $375 million costs associated with the cancellation of contracts for two deepwater rigs in the Gulf of Mexico," BP said.

Benchmark Brent prices averaged $55 a barrel in the first quarter of 2015, almost half the level of a year ago.

The fall in upstream earnings was despite increased production.

Underlying pre-tax replacement cost profit for BP's refining unit was $2.2 billion for the quarter, compared with $1 billion a year earlier.

"The result reflects the stronger overall refining environment, increased refining optimisation and production and improved marketing performance. There was also a stronger contribution from supply and trading than a year earlier. Simplification and efficiency programmes also contributed to lower costs in the downstream," BP said.

Estimated underlying net income from Russia's Rosneft was $183 million, compared with $270 million a year earlier.

First quarter results included a $215 million non-operating charge as part of a $1 billion restructuring programme that will include thousands of job cuts.