BP
LOOK beneath the oil spill, and BP’s underlying performance in the second quarter was actually rather strong. Perhaps management redoubled their efforts to try and get investors to cut them some slack. In that respect, they failed: the shares closed virtually flat yesterday.
Stripping out $21.9bn worth of post-tax charges related to the spill, the oil major managed to meet most analyst expectations. Exploration & Production booked $6.2bn in profit, against $4.9bn in the same period last year, as a 39 per cent increase in prices more than offset a four per cent dip in volumes.
In Refining & Marketing (the petrol stations side of the business), the company staged a remarkable comeback, posting a $1.7bn profit compared to $1bn a year ago.
Cash generation was good, which is just as well considering the black hole it is throwing money down at the moment. It generated $6.8bn in the quarter, and spent $2.1bn of that on the spill effort.
Reducing the debt pile, which shrunk from $25.2bn at the end of March 2010 to $23.2bn at the end of June, will also help the group cope with the huge costs of the Gulf disaster, as will its disposal of $30bn of assets.
Quite what this means for the future shape of the oil major is unclear. Asset disposals coupled with a moratorium on off-shore drilling could hurt production down the line. And if the dividend does return, it could be a shadow of its former self.