BP's profit surge 71% on higher oil prices and output

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LONDON-Shares in BP PLC rose to the highest level since 2010 on Tuesday as the company's efforts to regain its position among Big Oil's elite showed signs of paying off.

Upstream reported the strongest quarter since third quarter 2014 on both a replacement cost and underlying basis.

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 United Kingdom portion of the North Sea, one in India, and one in Oman.

At the same time, the London-based company saw its debt pile rise following $1.6 billion in payments to settle remaining lawsuits following the deadly 2010 Deepwater Horizon spill in the Gulf of Mexico which has cost it more than $65 billion. The oil rig exploded in 2010, killing 11 and flooding the Gulf of Mexico with millions of barrels of crude. Bob Dudley, Group chief executive of BP said regarding to the recent data. The company expects its capital-expenditure budget to fall into the lower end of its guidance this year, estimated at around $15 billion.

It agreed to a landmark $20 billion deal to settle all federal and state claims for the accident in 2015.

"Overall it was a very healthy set of results", said Martijn Rats, analyst at Morgan Stanley, which has a "neutral" recommendation on BP stock. Including spill costs, cash flow was $3.6 billion, up from $2.1 billion a year earlier.

Shares in BP (LON:BP) have climbed into positive territory today as the oil major updated investors on its first-quarter performance, posting a rise in profits on the back of stronger crude prices.

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Rival oil major Royal Dutch Shell last week reported a 42% rise in underlying quarterly profits to 5.3 billion U.S. dollars (£3.8 billion). Brent crude is now trading around $75 a barrel.

The spill payment in the first quarter was "US$500 million more than I expected", although that probably means that the burden will be lower later this year, said Redburn analyst Rob West. "Cash flow was good but messy, with less cash tax paid than expected". With rising output from our new major projects and excellent reliability, Upstream production was 9% higher than a year earlier.

Though BP has worked through nearly all of the 390,000 legal claims stemming from the 2010 explosion, the bill for its remaining claims unexpectedly jumped late past year.

But BP still hasn't escaped the financial liabilities that have hobbled it since Deepwater Horizon.

BP's profits for 2017 total $1.5 billion, and they also managed to net $2.1 billion during the fourth quarter of 2017, Reuters reported. That included the final installment from a settlement with the Justice Department to resolve all criminal claims. Payments are expected to be just over $3 billion in 2018, weighted to the first half of the year.

BP caps a mixed earnings season for the world's biggest oil companies.

"Underlying profit was up 23% on the previous quarter and was our best quarterly result in three years".

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