BP Net Profit Jumps $5.43 Billion in Q3

Oct. 30, 2012
The company's more stable oil prices in the third quarter resulted in some positive reversal of the unusual price effects seen in the second quarter earnings.

BP (IW 1000/4) on Tuesday said its net profit jumped 7.7% to $5.43 billion in the third quarter compared to the equivalent period last year as income from divestments offset lower output.

BP added that it was hiking its quarterly dividend by 12.5% to nine cents a share on the back of the strong earnings.

"BP's performance and the strong progress we are making in transforming the company give us the confidence to increase distributions to our shareholders," the company's chief executive Bob Dudley said.

"We are on track with our strategy to 2014 and are laying the right foundations for sustainable growth during the coming decade," he added.

The company, which last week unveiled a massive strategic deal with Russian state oil firm Rosneft, said net profits increased in the third quarter, or three months to the end of September, from $5.04 billion a year earlier.

BP had plunged into a net loss during the second quarter of 2012, hit by lower output, falling oil prices and a near $5.0 billion writedown on the value of assets.

"The (third) quarter's results benefited from a strong performance in BP's downstream business, where good operational delivery capitalized on increased refining margins," it said.

"In the upstream, performance was similar to the second quarter as increased production from new projects and completion of turnarounds in the Gulf of Mexico was offset by seasonal maintenance in North Sea and Alaska and the impact of Hurricane Isaac in the Gulf.

"In addition, more stable oil prices in the third quarter resulted in some positive reversal of the unusual price effects seen in the second quarter earnings," BP added.

BP, seeking to reposition itself after the Gulf of Mexico oil spill disaster in 2010, agreed last week to sell its half of Russian venture TNK-BP to Rosneft for $17.1 billion plus a 12.84% share of the state company.

BP added it would spend $4.8 billion of the proceeds to buy another 5.66% of Rosneft from the Moscow government, bringing its total stake in the Russian company to 19.75%.

On Tuesday, BP said that its oil and gas output during the third quarter, excluding TNK-BP, stood at 2.26 million barrels a day, down 2.7% compared with the third quarter of 2011.

"Looking ahead we expect fourth-quarter reported production to be higher than the third quarter as we exit the maintenance season, and see the continuing benefit of our major project start-ups," the company said.

"The extent of the increased production will likely be muted by the timing of Gulf of Mexico and North Sea divestments expected to be completed during the fourth quarter."

For the past two years, BP has set about selling what it sees as non-core assets to help fund massive compensation costs resulting from the Gulf of Mexico disaster.

In the third quarter, it sold its Carson refinery in California to peer Tesoro Corp. for $2.5 billion. Earlier this month, BP offloaded its ill-fated Texas City refinery and a portion of its US retail and logistics network to Marathon Petroleum Corp. also for $2.5 billion. The Texas City facility suffered a deadly explosion in 2005 that killed 15 workers and sparked safety concerns across BP's U.S. operations.

The British group's reputation took a far bigger hammering two and a half years ago after an explosion on the BP-leased Deepwater Horizon rig killed 11 workers and sent millions of barrels of oil spewing into the sea. The blast on April 20, 2010 sparked what has widely acknowledged to be the worst environmental catastrophe in U.S. history.

BP on Tuesday said it had so far sold assets totaling more than $35 billion to help cover the costs of the tragedy, a figure set to reach $38 billion by the end of 2013.

Copyright Agence France-Presse, 2012

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