BP reports $916 million Alaska profit in ‘18
BP saw improved results in 2018 as increasing oil prices helped boost the producer’s bottom line both in Alaska and worldwide.
In Alaska, the London-based major netted $916 million last year from its North Slope operations, according to the company’s 2018 annual report. Those profits came on the back of more than $4.3 billion in total revenue.
Comparatively, BP generated an $830 million profit from $3.3 billion in revenue in 2017.
Worldwide the company netted nearly $9.4 billion in profits in 2018 versus nearly $3.4 billion the year prior.
“Our teams have delivered strong results across the business and we are well positioned to continue to deliver value as we play our part in the dual challenge of delivering more energy with fewer emissions,” BP Chairman Helge Lund said regarding the 2018 results in a letter to shareholders.
Company officials in Alaska said higher oil prices were a primary driver for the improved margins.
BP’s Brent indexed crude — which Alaska North Slope oil follows closely — sold for an average of $71.31 per barrel last year, roughly a 25 percent increase versus the 2017 average price of $54.19 per barrel.
BP Exploration Inc., the company’s upstream Alaska business, paid $804 million in production, property and corporate taxes and royalties to the State of Alaska last year, BP Alaska controller David Knapp said. The company also invested $370 million in capital projects in Alaska in 2018, according to Knapp.
BP operates the mature, iconic Prudhoe Bay oil field and has interests in the producing Milne Point and Point Thomson units on the North Slope as well. The company is required to report its upstream Alaska business in its annual report and accompanying “20-F” financial report.
BP Alaska officials have touted their ability to generally hold oil production from Prudhoe and its satellite fields steady at roughly 280,000 barrels per day since 2016 despite cost reductions. The company is also conducting a 3-D seismic data shoot over the entire Prudhoe field this spring.
While BP made $916 million on the Slope last year, the company’s Alaska leaders insist a $531 million profit figure is more accurate, as it captures the costs for all of its operations in the state, which include the Trans-Alaska Pipeline System and marine oil transport from the Valdez oil terminal. They note the $531 million Alaska profit figure is more representative of BP’s total Alaska business because it also accounts for the property taxes paid on the midstream infrastructure.
However, those costs of getting the oil to market are also deductible from the state’s production tax.
BP owns 48.4 percent of the Trans-Alaska Pipeline System, the largest single share of the oil transport network. The company also has oil tankers dedicated to its Alaska operations and has supported the Alaska Gasline Development Corp. with predevelopment work on the $43 billion Alaska LNG Project.
BP pulled the Alaska-class tanker Frontier from service in September, according to the annual report, leaving it with three oil tankers dedicated to operations in the state.
“With the reduction in volume over time, as well as new efficiencies identified in the shipping programme, Frontier has been removed from service and its carrying value impaired accordingly,” the report states.
In 2018, BP also sold its 39 percent stake in the large Kuparuk oil field ConocoPhillips as part of a neutral value swap with the Houston-based producer that included BP acquiring an additional 16 percent interest in the Clair field in the North Sea. BP spent approximately $1.7 billion related to acquiring the Clair field interests in the deal, according to the report.
Elwood Brehmer can be reached at [email protected].