BP powers back to profit despite $750m African adventure blow

Oil major BP cheered the City on Tuesday as it moved back into the black despite a hefty financial hit from abandoning a project in Angola.

The blue-chip’s half-year profits of $1.6 billion (£1.2 billion) bounced back from a $2 billion loss a year earlier, driven by recovering crude prices this year as well as a sharp 10% rise in oil and gas production from new projects coming on stream.

But in the most recent quarter, BP was dented by a $753 million charge as it called time on a 2014 gas discovery off the coast of the African country after judging that the find wasn’t commercially viable.

Nonetheless, the shares rose 14.6p, or more than 3%, to 460.35p as investors saluted the better-than-expected figures, with chief executive Bob Dudley — who has faced protests over his huge pay deals in recent years — claiming “considerable strategic momentum”.

Dudley, who took over from Tony Hayward in the wake of 2010’s Deepwater Horizon disaster, said: “We continue to position BP for the new oil-price environment, with a continued tight focus on costs, efficiency and discipline in capital spending.” Oil prices — above $110 a barrel as recently as three years ago — are now hovering at half that level.

BP has been reshaping the business in order to cope with long-term low crude prices, shedding thousands of jobs and selling off billions in assets.

But the company has recently been eclipsed by Royal Dutch Shell, which bought BG Group last year.

RBC analyst Biraj Borkhataria said: “BP has underperformed its peers recently and we would expect some of that underperformance to reverse in the near term.”

The dividend, a steady staple of UK pension funds, was held unchanged at 10 cents.