BP production growth boost shares despite profit drop

British energy company BP's (BP.L) second-quarter profit dipped but beat forecasts after an exploration write-off in Angola, while a 10 percent rise in oil and gas production from a slew of new projects gave shares a strong boost. 

BP also increased cash flow from operations in a further sign that efforts by top oil companies to cut costs since the 2014 price slump are paying off as it expects oil prices to hold at around $50 a barrel into next year.

At the same time, BP saw its debt pile rise to nearly $40 billion as it invests in bringing projects online and continues to pay off its bill relating to the deadly 2010 Deepwater Horizon rig explosion in the Gulf of Mexico. 

Gearing, the ratio between debt and BP's market value, rose to 28.8 percent by the end of June from 24.7 percent a year earlier.

BP's production was up 9.9 percent from a year earlier at 2.431 million barrels of oil equivalent per day helped by some of the new start-ups. 

They include the Quad 204 oilfield, one of the largest projects in the North Sea in recent years which BP launched in May after a $5.7 billion redevelopment. 

BP said its oil and gas production will be broadly flat in the third quarter as further project start-ups outweigh the impact of maintenance. 

The company hopes to add 800,000 barrels per day of new production by the end of the decade.

Chief Financial Officer Brian Gilvary told Reuters BP's 2017 capital spending was expected to be around $16 billion, in the middle of the forecast range. 

BP's operating cash flow, excluding payments related to the Gulf of Mexico oil spill, rose in the second quarter of the year to $6.9 billion from $5.3 billion a year earlier. 

BP's operating cash flow, including payments related to the spill, rose to $4.9 billion in the first quarter of the year from $3.9 billion a year earlier.