“I think what you’re seeing coming through those earning numbers is an improved ramp-up of the projects … underlying production growth in the upstream of around 14 percent and a resilient downstream,” Brian Gilvary, chief financial officer at BP, told CNBC’s “Squawk Box Europe” on Tuesday. Upstream is classed as the exploration and production aspects of the oil industry.
“So overall a strong set of results this quarter,” he added.
The latest figures come at a time when the environment for oil companies is dramatically improving, amid signs the energy market is rebalancing and crude futures have rallied to multi-year highs.
The main driver for a recent uptick in oil prices has been a supply cut from major oil producing group OPEC and its allied partners, who started to withhold output in January last year. The production cuts are scheduled to continue throughout 2018.
The move has helped to stabilize crude futures and support oil companies in recent quarters. Brent crude traded at $74.81 a barrel on Tuesday morning, up 0.1 percent, while West Texas Intermediate (WTI) was at $68.71 a barrel, 0.2 percent higher.
“We expect improving earnings and cash generation to show through early 2018 as BP captures higher commodity prices and widening crude spreads,” Biraj Borkhataria, analyst at RBC Capital Markets, said in a research note Tuesday.
“We expect BP’s cash flow generation to improve this year, both on an absolute basis and relative to peers. This should help improve confidence around BP’s dividend,” Borkhataria added.
On Thursday, Shell reported a 42 percent rise in profits during the first three months of the year, underpinned by a recent uptick in oil and gas prices. The Anglo-Dutch firm said steady progress in its divestment program had helped the company beat analyst expectations, though some external observers were concerned about its cash flow generation.