LONDON (AFP) – BP returned to net profit in the second quarter, lifted by the absence of major write-downs, the British energy giant said Tuesday.
Earnings after taxation stood at $2.042 billion (1.541 billion euros) in the three months to the end of June, BP revealed in a results statement.
That compared with a loss of $1.519 billion in the same part of last year, when it was hit by lower oil prices and vast write-downs on the value of assets.
The company also raised the total amount of money it has set aside to pay costs related to the devastating 2010 Gulf of Mexico oil spill disaster to $42.4 billion, from $42.2 billion previously.
BP added that its so-called replacement cost profit — which excludes gains or losses in the value of inventories — jumped to $2.4 billion in the quarter, compared with $104 million last time around.
However, stripping out write-downs on the value of oil fields and refineries in the United States last year, underlying replacement cost profit sank 24 percent to $2.71 billion.
That dashed market expectations of $3.40 billion, according to analysts polled by Dow Jones Newswires, and sent BP’s share price falling in morning deals.
BP said it faced a higher tax rate, lower oil prices, higher costs and lower post-tax income from Russia due to currency effects.
In addition, total oil and gas production fell 1.5 percent to 2.241 million barrels of oil equivalent per day in the reporting period, mostly because of asset sales.
“The results show strong underlying pre-tax performance from BP’s businesses,” said Chief Executive Bob Dudley in the earnings release. “We are seeing growth in production from new high-margin projects and are making good progress in exploration and project delivery. Completion of our operational milestones confirms our confidence in delivering our commitment to materially increase operating cash flow in 2014.”
In morning deals, however, BP’s share price slid 2.08 percent to 457.7 pence on London’s FTSE 100 index of leading companies, which was 0.30 percent higher at 6,580.03 points.
“The oil giant has unfortunately missed analyst estimates, with increased government taxes, currency movements and a lower oil price all contributing,” said equity analyst Keith Bowman at Hargreaves Lansdown Stockbrokers.
“Actual production has again fallen, impacted by ongoing business sales, whilst legal settlements in relation to the Gulf Of Mexico accident continue to cast a long shadow.”
Copyright 2013 The National Memo