BP profits more than double to $5.6bn

BP profits more than double to $5.6bn
By Ed Crooks, Energy Editor
Copyright The Financial Times Limited 2010
Published: April 27 2010 08:44 | Last updated: April 27 2010 14:05
http://www.ft.com/cms/s/0/75d4009c-51cd-11df-a2a2-00144feab49a.html


BP has exceeded analysts’ expectations with a 135 per cent rise in post-tax profits for the first quarter, and continued to cut its debts, thanks to the rebound in oil and gas prices and an improvement in the performance of its refineries.

BP’s share price fell more than one per cent despite the better than expected results partly because of the fatal explosion at a rig working for BP in the Gulf of Mexico, from which 11 workers are still missing. On Tuesday BP intensified efforts to stop the underwater well leak that was streaming oil 80 miles across the Gulf of Mexico.

The dividend was left unchanged at 14 cents per share, for the eighth successive quarter.

Replacement cost profit, which strips out the effect of changes in the value of inventories, was $5.6bn for the quarter, up from $2.39bn in the equivalent period of 2009.

Stripping out non-operating items and accounting effects, the rise in profit was 118 per cent, well above analysts’ average expectations of a rise of about 85 per cent.

BP has been battling this week to control the oil spilling from the Gulf of Mexico well drilled by the rig, which has been leaking at the rate of about 1,000 barrels per day.

Four remotely operated underwater vehicles have dived to the ocean floor to try to close a valve, and prevent a spill that the US Coastguard has labelled a very serious threat to the coasts of Louisiana, Texas, Mississippi and Florida.

The first-quarter results benefited from the rise in oil prices compared to the first quarter of last year, and a recovery in refining margins and natural gas prices compared to the fourth quarter.

The oil and gas exploration and production business reported a 94 per cent rise in operating profit over the year to $8.3bn, although this was slightly lower than in the final quarter of 2009.

Oil and gas production volumes were 1 per cent lower than in the fourth quarter, at 4.01m barrels of oil equivalent per day.

In refining and marketing, profits fell 33 per cent compared to the first quarter of 2009 to $729m. However, this still marked a sharp improvement from the $1.9bn loss reported for the fourth quarter of 2009.

World gas production

FT interactive graphic: The balance of power among the producers of natural gas has changed dramatically in the last few decades. Use this graphic to see the shifts

The year-on-year fall in profits reflected a “significantly weaker” contribution from BP’s trading business, which had contributed an extra $500m profit in the first quarter of 2009, thanks to exceptionally favourable trading conditions.

BP said the pressure on refining margins was “partially offset by operational improvements and further cost efficiencies in the fuels value chains.”

BP’s net debt continues to fall, dropping to $25.2bn at the end of March, down from $26.2bn at the end of last year.

Earnings per share were up 134 per cent at 29.82 cents.