BP (LON:BP) saw its underlying replacement cost profit for the third-quarter 2018 (Q3 18) hit $3.8 billion, more than doubling the $1.9 billion recorded a year prior, with proceeds helping the oil and gas supermajor to finance its acquisition of BHP Billiton’s (LON:BLT) US shale assets in cash.
The British oil and gas company first agreed to acquire the US shale assets from BHP in late-July for around $10.5 billion, with the aim to expand its geographical footprint and increase production in what is one of the largest deals the business has done in nearly two decades.
‘Our focus on safe and reliable operations and delivering our strategy is driving strong earnings and growing cash flow,’ Group CEO Bob Dudley said. ‘Operations are running well across BP and we’re bringing new, higher-margin barrels into production faster through efficient project execution.’
‘We have made very good progress with our acquisition from BHP and expect to complete the transaction tomorrow,’ he said.
‘This will transform our position in the US Lower 48 and we expect it to create significant value for BP,’ he added.
Gulf of Mexico oil spill
A strong set of results and the completion of its acquisition will please investors, who have endured the fallout from the Deepwater Horizon oil rig disaster in the Gulf of Mexico in 2010, with the business still paying down penalties valued at over $65 billion.
Operating cash flow (excluding Gulf of Mexico oil spill payments) for Q3 18 stood at $6.6 billion, with the company paying $500 million in penalties to the US government in the quarter.
The Thunder Horse Northwest expansion project in the Gulf of Mexico and the Western Flank B project in Australia began production in October, both ahead of schedule. They are BP’s fourth and fifth Upstream major projects to start up in 2018.