BP profits fall; refocus boosts Weir; Santander lower
The oil giant has reported a drop in underlying replacement cost profit for the first three months to $2.4bn, against $2.6bn a year earlier.
The company said the the fall “reflected the weaker price and margin environment at the start of the quarter, partially offset by strong supply and trading results”.
Despite the fall, the profit figure was higher than analysts’ expectations.
BP chief executive Bob Dudley said the company’s performance during the quarter “demonstrates the strength of our strategy”.
“With solid Upstream and Downstream delivery and strong trading results, we produced resilient earnings and cash flow through a volatile period that began with weak market conditions and included significant turnarounds.”
David Barclay, head of office at Brewin Dolphin Aberdeen, said: “It’s a mixed set of results from BP, but they are largely in line with investor expectations for a challenging first quarter. Average production levels increased to 3.8 million barrels per day of oil equivalent, driven by major new projects coming onstream and the integration of BHP Billiton’s US shale assets.
“A weaker oil price environment at the beginning of the year saw profits slip to $2.4 billion, but with production levels expected to remain flat a firmer oil price backdrop should ensure a more resilient second quarter. While debt levels are marginally beyond BP’s target range,
“$600 million of divestment proceeds were raised in the quarter with $10 billion of asset sales planned over the next two years to manage debt costs. Income investors will be pleased to see the first quarter dividend payment rise to 10.25 cents per share, an increase of 2.5% on the same time last year.”
Engineer Weir Group reiterated full year revenue and profit guidance as first quarter orders rose on the back of its Esco acquisition which offset a weaker performance in oil and gas operations.
Orders from continuing operations including Esco rose 18% year-on-year, Weir said in a statement. That changed to a fall of 7% when the US mining tools maker was excluded.
Oil and gas orders were 23% lower as a result of capital and pipeline capacity constraints in North America and the absence of the strong levels of first half refurbishment activity seen last year, said the company which no longer manufactures on any scale in Scotland.
John Moore, senior investment manager at Brewin Dolphin, said: “Weir Group has had a good start to 2019 and a great deal of that can be put down to the smooth integration of Esco. While oil and gas orders fell nearly a quarter on 2018, the mining division is performing beyond expectations. If anything, today’s results further support the management team’s decision to make the business simpler, more focussed, and more competitive.
“The level of debt has seen a slight increase, which in part can be explained by seasonality. However, investors will be looking for signs that this will move lower as the year progresses. The recent oil price increase offers the potential for a much-needed pick-up in activity from levels reported at the oil and gas division, but it may well be that a sustained period of firm oil prices is required to recover some of the ground already lost.”
Banking giant Santander has revealed a 35% plunge in first-quarter profits as a result of Brexit uncertainty and competition in the mortgage market.
The Spain-based bank reported pre-tax profits of £270 million for the first three months of 2019, down from £414 million a year earlier. Underlying pre-tax profits fell 13% to £352 million in the first quarter.
The group said results suffered as the wider economy has been held back by Brexit fears, as well as mortgage margin pressure, costs of its swingeing overhaul, and charges related to ring-fencing to keep personal and small business banking services separate.
Santander announced earlier this year that it is closing 140 UK branches, putting more than 1,200 jobs at risk.
Oil service group Wood has secured a contract with SABIC to deliver the engineering design for a petrochemical research centre in Saudi Arabia.
Wood will provide conceptual, basic and detailed design engineering for SABIC’s new 65,000m² technology centre in Jubail Industrial City on Saudi Arabia’s east coast. The scope of work includes engineering design of analytical and material labs to accommodate testing, characterisation and materials analysis, plus support utilities including a warehouse, workshop and substation.
Effective immediately, the contract will be delivered by Wood’s base in Al-Khobar and builds on the company’s delivery of front-end engineering design services for expansion and upgrades to existing SABIC facilities in the region.
Dave Stewart, CEO of Wood’s Asset Solutions business in Europe, Africa, Asia & Australia, said: “This contract demonstrates our extensive experience in the design, development and engineering delivery of key energy infrastructure, and solidifies our position as an engineering partner for SABIC’s projects in the Middle East.
“Wood is committed to expanding our business in Saudi Arabia, and this contract aligns with our strategic objective to grow our presence in the downstream sector in the region, particularly in petrochemicals.”
Wood was recently selected to develop the world’s largest fully integrated crude oil to chemicals (COTC) complex in Saudi Arabia on behalf of SABIC and Saudi Aramco, as the first PMC contractor.