BP Profit Tumbles as Production Falls
BP reported a 45 percent fall in third-quarter replacement-cost profit to $3.867 billion due to lower oil and gas production, problems at its refining division and fewer asset sales which had flattered the year-earlier result.
Though also lower than the same period last year, BP's underlying profits were towards the top end of analysts' forecasts, helped by a lower tax rate.
BP, whose Chief Executive Tony Hayward last week outlined an restructuring to turn around what he called BP's "terrible" performance, also buoyed investors on Tuesday by promising the slide in production would end in the fourth quarter and that troubled refineries would come back on stream as predicted.
"The difficulties in the production and refining areas have, as expected, materially affected profits for the quarter," Richard Hunter, Head of UK Equities at Hargreaves Lansdown Stockbrokers, saidTuesday.
BP said production of oil and gas fell 4 percent to 3.65 million barrels of oil equivalent per day (boepd), due to asset sales and natural field decline not being matched with new start-ups after key projects were delayed.
Analysts had forecast production of 3.70 million boepd.
However, BP stuck to its full-year production guidance of 3.8 to 3.9 million boepd, and a spokesman said this meant BP's fourth-quarter production should be around 3.83 million boepd, in line with the 3.84 million in the fourth quarter of 2006.
Profits collapsed at BP's refining division to $376 million from $1,503 million in the same period last year.
BP suffered severe outages at its Whiting and Texas City refineries in the U.S. during the quarter and said earlier this month that refining margins fell in the third quarter compared with the same period last year.
The world's third-largest western oil company by market capitalisation repeated that Whiting and Texas City would be fully on line in the first half of 2008.
BP said replacement cost net profit, which strips out the impact of changes in the value of fuel inventories, included a net loss of $346 million related to non-operating items.
This gave an underlying result of $4.213 billion, ahead of an average forecast of $4.06 billion for BP's third-quarter replacement cost net profits, excluding non-operating items, in a Reuters poll of 10 analysts.
In the third quarter of 2006, BP's results were boosted by around $2 billion in profits from asset sales.