BP has first profits dive in three years
Oil giant BP today revealed the extent of its problems with its first fall in quarterly profits for nearly three years.
Excluding one-off gains from the sale of assets BP's profits for shareholders dipped year on year from $6.46 billion (£3.3 billion) to $6.23 billion in the three months to the end of September.
The contrast with the preceding three months to the end of June is even greater, when BP made profits of $7.27 billion.
Today chairman Lord Browne warned that total oil production for the year will definitely be lower than in 2005. But rather than blame factors like the explosion at its Texas City refinery, production cuts from Alaska after leaks from its facilities and the delayed restart of production from its Thunder Horse platform, he said this was "due principally to divestments and the impact of higher prices on entitlements under production-sharing contracts".
He said he expects total production for the year to be around 3.95 million barrels per day, which is higher than the 3.8 million bpd seen in the third quarter but lower than last year's average output.
Lord Browne added that he sees total capital expenditure for the year rising to $16 billion with sales of assets expected to bring in around $6 billion.
In the third quarter replacement cost profits actually rose from $4.4 billion to $6.1 billion, which was well ahead of most analysts' forecasts but this included a $744 million rise against a $2 billion fall in the value of oil stocks held by the company and one-off gains of $1.2 billion against charges of $921 million mainly from profits made on selling upstream production assets.
BP, like all the major oil companies, enjoyed booming oil prices in the three months from July to September with Brent crude averaging $69.60 a barrel for that time. That was $8 better than the same period a year ago. Since then prices have dropped sharply and now Brent for December delivery stands at $59.17 a barrel.
Lord Browne said: "Ample inventories, a perceived lessening of geopolitical tensions and a lack of hurricane-related disruptions have contributed to the decline."
But he was more optimistic over US gas prices, saying the coming winter should push up demand while in the UK ample storage and increased import capacity should ease any concerns over winter supplies.
BP is facing a fresh attack on its reputation in the US on two fronts, with a report that is believed to accuse BP of safety failures at its Texas City refinery before last year's blast that killed 15 people and injured 180 others.
There are also new revelations about practices at BP's Alaskan operations, where it faces federal criminal prosecution.
The US Chemical Safety Board, the federal body charged with investigating BP's safety record, is understood to have found at least eight previous dangerous incidents at Texas City, according to leaks from the inquiry.
