After a tumultuous nine months for the oil and gas industry, there is finally a glimmer of hope in the fourth quarter as many companies have reported improved financials. BP recently revealed that their profits for 2018 were $12.7 billion (£9.7 billion), double what they made the previous year.
The increase in profits can be credited to the company’s expanded oil and gas output, which was made possible by BP’s acquisition of BHP’s onshore U.S. shale gas portfolio for $10.5 billion. This was BP’s largest deal in 30 years and has resulted in the company now producing 3.7 million barrels per day.
More Than Just Extraction
BP’s impressive profits are not solely due to oil extraction, but also their increased refining capacity. Refining throughput is at an all-time high and with Brent Crude dropping from 86.29 to 50.24 in the last quarter of 2018, profit margins have improved for refinery operations. In fact, refinery profits are now higher than they were in 2015 when oil prices were at their lowest.
BP’s net income for Q4 2018 was $3.5 billion, compared to $2.11 billion in the same period in 2017. The news has been well-received by investors, with BP’s stock seeing a 4.3 percent increase on the FTSE in early February.
While the large profit margins are certainly good news for BP, there is still a great deal of uncertainty surrounding future oil prices. The industry has been weighed down by factors such as slowing global economic growth, Sino-American trade tensions, and fluctuating oil prices throughout 2018.