BP Rebounds to Show Profit in Q2

July 26, 2011
Revenues soared by 39% to $103.84 billion

After a huge loss last year due to the Gulf of Mexico oil spill disaster, and aided by high oil prices, BP reported a net profit in the second quarter of 2011. Earnings after taxation hit $5.62 billion in the three months to June compared to a vast loss of $17.15 billion in the second quarter of 2010.

Adjusted net profit -- stripping out fluctuations in the value of energy inventories -- hit $5.3 billion in the second quarter of 2011 after a huge loss of $16.97 billion last time around. The reading fell short of market expectations for adjusted profit of about $6 billion.

Total revenues soared by 39% to $103.84 billion in the second quarter, compared with $75.87 billion last year.

"BP remains a work in progress having missed estimates at the half year point," said Richard Hunter, head of UK Equities at Hargreaves Lansdown Stockbrokers. "Shadows from the Gulf spill may have lightened, but the forced disposal program has had an inevitable effect on output."

Production meanwhile plunged nearly 11% to 3.43 million barrels of oil equivalent per day in the second quarter, which mostly reflected the suspension of drilling activities in the Gulf of Mexico.

Output was also hit as the group sold of $25 billion of assets to help foot the bill for the disaster.

But the company was boosted by high oil prices, which soared during the reporting period amid violent unrest in the crude-producing Middle East and North Africa region.

The average price of London Brent crude oil rocketed by almost 50% to stand at $117.04 per barrel in the second quarter.

"BP is making rapid progress against our priorities. In February we said we expected 2011 to be a year of consolidation as we reset the focus of the company," chief executive Bob Dudley said. "This is going well, while it is having the expected near-term impact on our volumes and costs."

BP added that it continued to meet costs in the Gulf coast and has now paid out $6.8 billion in claims and government payouts to fund economic and environmental restoration. And the group revealed that total clean-up costs now stand at $40.7 billion, down from previous guidance of $41.3 billion.

The group took a $600-million credit after reaching settlements with MOEX USA Corp., a U.S. subsidiary of Japanese trading house Mitsui & Co which has a 10% stake in the Macondo well project, and contractor Weatherford.

In order to meet its own compensation costs, BP is seeking to raise a total of $30 billion by the end of the year. So far, it has sold assets in Argentina, Colombia, Egypt, the United States, Venezuela and Vietnam.

Dudley has sought to move on from the catastrophe with a major shake-up that created a powerful safety division and overhauled the group's structure. However, he failed in his attempt at a historic tie-up with Russian state-owned energy giant Rosneft earlier this year. The deal collapsed in May over protests by BP's Russian partners in its local joint venture and the subsequent failure of efforts to buy out the unhappy shareholders.

Copyright Agence France-Presse, 2011

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