BP Profits Slump 53% in Second Quarter

CEO sees 'little evidence' of demand growth and predicts a long, sluggish recovery.

British energy major BP said Tuesday that second-quarter net profit slumped 53% to $4.39 billion due to falling oil prices and despite higher output. Stripping out oil inventories held, net profit was also down 53% to $3.14 billion in the three months to the end of June, BP said in a results statement. That compared with $6.75 billion in the same period of 2008 when oil had struck record highs above $147 per barrel.

Daily production climbed 4% to 4.005 million barrels of oil and gas in the second quarter, due largely to the startup of the 300,000-barrel-per-day Thunder Horse field in the Gulf of Mexico.

Group revenues fell to $56.56 billion in the second quarter from $110.98 billion.

BP said it has already achieved its goal of cutting costs by $2 billion in 2009 -- and expected to slash another $1 billion before the end of the year.

Chief Executive Tony Hayward said the group was delivering in very tough conditions. "We are in turbulent times, volatile and uncertain. But we continue to steer a steady course through choppy waters," Hayward said. "Despite the current climate, we are making good progress in growing our upstream [operations], turning around our downstream and driving cost-efficiency across the group."

Capital spending in the three months to June was $4.8 billion and $9.4 billion for the six month period, and should be less than $20 billion for the full year, according to BP.

Hayward said a recovery in global energy demand would be sluggish.

"The overall picture is of energy demand now stabilizing following significant falls in the first half of the year," Hayward said. "We see little evidence of any growth in demand and expect the recovery to be long and drawn out."

"BP may not be able to control the price of oil, but their measures to streamline the business and reduce costs show the board is in tune with the ebbs and flows of the market," said trader Manoj Ladwa at ETX Capital.

At BP, where Hayward has been in charge since 2007, more than 5,000 jobs are being slashed in a bid to reduce costs.

Copyright Agence France-Presse, 2009

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