BP profit falls as Gulf spill takes toll
Oil najor BP reported a bigger-than-expected drop in profits despite an increase in crude prices, as production fell after it was forced to sell fields to pay for the Gulf of Mexico oil spill.
London-based BP added it would continue its disposal programme, putting some smaller fields in the Gulf of Mexico on the block. A spokesman said the group was not pulling back from the area but was seeking to focus on larger fields there.
Europe’s second-largest oil group by market value said its replacement cost (RC) net profit – the standard measure of profit in the industry – was $4.93bn (£3.03bn) in the quarter, compared to $5.61bn in the same period last year.
BP said oil and gas production, excluding its Russian joint venture, TNK-BP, was down 6 percent at 2.45m barrels of oil equivalent per day.
The company said tough conditions in the refining business led to a drop in profits at its downstream unit.
Stripping out one-off items such as the profit on asset sales, the result was down 13 per cent to $4.80bn, below an average forecast of $5.10bn from a Reuters poll of nine analysts.
Royal Dutch Shell last week reported a 16 per cent rise in underlying profits, while U.S. rival ConocoPhillips reported a 1 percent drop and industry leader Exxon Mobil reported an 11 percent drop.
Brent crude prices averaged $118.60 per barrel last quarter, up from $105.43 in the same period a year before.
RC earnings strip out unrealised gains or losses related to changes in the value of inventories, and as such are comparable with net income under US accounting rules.