More Than a Year After Deepwater Disaster, All is Well at BP

Oct. 25, 2011
The company has reached a 'clear turning point,' surging back into profit in the first nine months of 2011.

BP surged back into profit in the first nine months of 2011, and has now reached a "clear turning point" after last year's devastating Gulf of Mexico oil disaster, the company declared on Tuesday.

The group said it will sell another $15 billion of non-core assets by 2013, expanding its divestment initiative to $45 billion, as it seeks to recover oil spill-related costs and re-invest in high-growth activities.

Net profits reached $17.7 billion in the nine months to September, helped by high oil prices, BP said in a results statement. That compared with a loss of $9.3 billion in the same part of 2010, when the company was ravaged by soaring costs linked to the catastrophe.

Adjusted profits -- stripping out the impact of changes in the value of inventories -- hit $15.9 billion. That contrasted sharply with a loss of $9.5 billion last time around.

"The company has steadied, turned round and now, this month, with high-margin assets returning on stream, we have reached a clear turning point," said Chief Executive Bob Dudley.

Dudley added that the company has lived up to its commitments in the Gulf and is putting "safety and risk management at the absolute heart of our business."

Third-quarter production fell 12% to 3.319 million barrels of oil equivalent per day, due to asset disposals and the suspension of production in the Gulf, though BP expects output to be higher in the current fourth quarter.

"Our operations are regaining momentum and we are facing the future with great confidence," said Dudley.

"I believe we will build on our strengths to substantially grow operating cash flows, allowing us to directly increase returns to shareholders as well as invest for future growth."

Net profits meanwhile rocketed by 175% to $4.9 billion in the third quarter, driven by a strong performance from exploration and production. That compared with $1.785 billion year-over-year.

And adjusted profits soared to $5.14 billion in the third quarter, compared with $1.847 billion year-over-year.

"The financial picture for BP today is very different from a year ago," Dudley said.

"We are today reporting replacement-cost profits for the first nine months of this year of $15.9 billion, compared to a $9.5 billion loss for the same period in 2010, which was driven by the $40 billion charges we had taken with respect to Gulf of Mexico spill-related costs."

BP to Restart Drilling in the Gulf of Mexico

The results come one week after BP received approval from U.S. authorities to restart drilling in the Gulf of Mexico, 18 months after a BP well blowout killed 11 and released millions of barrels of crude into the ocean.

BP added that previously announced plans to sell two U.S. refineries and associated marketing activities were included in the expanded asset-disposal program.

The group last week said it has recovered $4 billion in costs linked to the spill from Anadarko Petroleum Co.

Anadarko also has agreed to transfer to BP its 25% stake in the Macondo well, where a leak in 2010 sparked the environmental catastrophe on the Gulf coast.

Earlier this month, the U.S. government slapped BP, Transocean -- the Swiss owner and operator of the drilling rig -- and Halliburton with citations for violating oil-industry regulations in what is expected to lead to massive fines for the deadly 2010 oil spill.

The Macondo leak was triggered by an explosion on the BP-leased Deepwater Horizon rig in the Gulf of Mexico on April 20, 2010. The blast killed 11 workers, caused millions of barrels of oil to spew into the sea.

Since the incident, BP has so far signed agreements to sell a total of $26 billion of non-core assets.

Copyright Agence France-Presse, 2011

Popular Sponsored Recommendations

Global Supply Chain Readiness Report: The Pandemic and Beyond

Sept. 23, 2022
Jabil and IndustryWeek look into how manufacturers are responding to supply chain woes.

Empowering the Modern Workforce: The Power of Connected Worker Technologies

March 1, 2024
Explore real-world strategies to boost worker safety, collaboration, training, and productivity in manufacturing. Emphasizing Industry 4.0, we'll discuss digitalization and automation...

How Manufacturers Can Optimize Operations with Weather Intelligence

Nov. 2, 2023
The bad news? Severe weather has emerged as one of the biggest threats to continuity and safety in manufacturing. The good news? The intelligence solutions that build weather ...

How Organizations Connect and Engage with Frontline Workers

June 14, 2023
Nearly 80% of the 2.7 billion workers across manufacturing, construction, healthcare, transportation, agriculture, hospitality, and education are frontline. Learn best practices...

Voice your opinion!

To join the conversation, and become an exclusive member of IndustryWeek, create an account today!