BP (NYSE:BP) wants to buck the conventional wisdom that large integrated oil companies can't deliver large production growth. This past earnings report started to show how the company plans to get there with the start-up of one major capital project. This project, and seven more slated to come online in the coming years, should increase BP's overall production by 40%!

Let's take a look at BP's most recent quarterly results to see if there are any initial signs of progress on this plan, the challenges it will face, and what investors can hope or expect from this plan in the coming years. 

Jack up rig with support vessels.

Image source: Getty Images.

By the numbers

Results*Q1 2017Q4 2016Q1 2016
Revenue $55,863 $52,121 $38,512
Net income $1,492 $543 ($558)
Earnings per ADS (U.S. GAAP) $0.45 $0.16 ($0.19)
Operational cash flow $2,114 $2,428 $1,872

*IN MILLIONS, EXCEPT PER SHARE DATA. SOURCE: BP EARNINGS RELEASE.

This is what you could probably call the "cleanest" earnings report from BP in a long time. This time around, there weren't a whole bunch of one-time charges or gains related to impairments or whatnot to muck up the numbers. 

All in all, it was a decent quarter for the company. The biggest and most obvious change was that operations from its upstream side of the business improved substantially on a year-over-year basis. Keep in mind that the first quarter of 2016 was the nadir of oil prices, so the expectation bar was already set pretty low for the company.  The added bonus in upstream's results is that both BP's production from the U.S. and the rest of the world showed positive results. For more than a year, BP's U.S. operations have been a major drag on the upstream side of the business  

The other pleasant surprise in these results is the strong contribution from downstream operations. Most U.S.-centric refiners have struggled with a low margin environment., but BP's refineries outside the U.S. were strong and its lubricants and petrochemical businesses continue to produce about $500 million in earnings quarterly.

BP's replacement cost profits by business segments for Q1 2016, Q4 2016, and Q1 2017. Shows strong growth year over year for Upstream, flat for Downstream and Rosneft, and lower expenses for Corporate.

Source: BP earnings press releases. Chart by author.

The one thing that looks a little off is the lower operational cash flow numbers. That figure includes a $3.6 billion working capital build compared to a $400 million drawdown in the prior quarter. Large working capital builds are pretty common in this business, and most of BP's peers have reported similar things in their own earnings reports. With four of the company's seven major projects slated to come online in the first half of 2017, we can reasonably expect some sizable working capital drawdowns throughout the rest of the year.

Also, because of some heavy Deepwater Horizon-related payments in the quarter, the company had to issue debt. The company ended the quarter with a net debt load of $38.6 billion and a net debt-to-capital ratio of 28%. That is starting to push the high end of the company's target range of 20%-30%. Hopefully rising production, reduced spending rates, and some help from oil prices will get it through this push.

Hop on the production growth train

2017 is going to be a year where we see the company start to kick its production growth rates into high gear. The company has seven major capital projects in the works that will add one million barrels of oil equivalent per day of new production between now and 2021. Four of those projects will start up in the first half of the year and start ramping up over the next several years. The first of those projects, its Trinidad onshore compression project, will improve recoveries of its mature natural gas fields off the coast of Trinidad. This project contributed toward increasing overall production by 3% year over year to 2.388 million barrels of oil equivalent per day.

If these projects weren't enough, BP continues to make large natural gas discoveries off the coast of Egypt. This is the third discovery in the offshore blocks where it holds a 100% working interest. One of those discoveries -- the Atoll -- project has more than 1.5 trillion cubic feet of natural gas and this new discovery is close enough such that it can be tied into the infrastructure at Atoll. This is on top of BP's recent 10% purchase of a working interest in Eni's massive Zohr gas field that has an estimated 30 trillion cubic feet of gas.

10-second takeaway

2017 is slated to be a big year for BP as it brings on a lot of new production. Results for next quarter will likely suffer a bit as a result, but management expects it all to even out by the end of the year. Hopefully, oil prices will cooperate as the company brings all this new production online. If this happens, then BP could go a long way in repairing all the damage oil prices inflicted on the balance sheet over the past couple years and get back to rewarding shareholders with increasing dividends.

Tyler Crowe has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.