BP is back.
The British-based oil and gas giant said Tuesday it will resume share buybacks after its profit doubled in the third quarter. That’s the clearest sign of confidence yet about a turnaround in its fortunes, and comes in a week when international oil prices rose above $60 a barrel for the first time in two years.
BP said it was able to balance its cashflow in the first nine months of the year at an average price of $49 a barrel (excluding large payments for the settlement of the 2010 Deepwater Horizon spill). That’s despite approving major investments at six new projects this year.
The profit growth was driven by a recovery in ‘upstream’ earnings from oil and gas production. The downstream segment also helped: refinery profit margins rose sharply after Hurricane Harvey knocked out around a quarter of U.S. refining capacity for several weeks.
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BP’s chief financial officer Brian Gilvary said the company will start buying back shares in the fourth quarter, citing “the momentum we see across our businesses and our confidence in the outlook for the group’s finances.”
In recent quarters, BP has been issuing shares as so-called “scrip” dividends, in an effort to hoard cash. The company’s management had said in the past they need an average price of $60 a barrel to cover the cost of investment and dividend payments.
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BP’s underlying replacement cost profit, the company’s definition of net income, hit $1.87 billion in the three months to September, well above consensus forecasts of just under $1.6 billion. That doubled a profit of $933 million a year earlier and $684 million in the second quarter of 2017, when the company took a large writedown on exploration.
BP’s results are in line with a trend of recovering earnings at global oil majors, which have needed nearly three years to get used to a world of low crude prices. Exxon Mobil and Chevron last week reported increases of around 50% in net income in the third quarter, while ConocoPhillips swung to a profit of $420 million from a loss a year earlier.