BP Earnings Slip 3.7% on Lower Production

Earnings adjusted for one-time items were $5.3 billion in the three months that ended in September, compared with $5.5 billion in the same period a year earlier. Analysts polled by Reuters had forecast earnings of $5.03 billion on average.

BP said it planned to sell another $15 billion worth of assets by the end of 2013 in addition to the $30 billion it has already announced. Net income excluding one-time items rose to $4.9 billion in the third quarter from $1.8 billion in the same period a year earlier on lower costs to cover the company’s response to a disastrous oil spill in the Gulf of Mexico in 2010.

BP’s chief executive, Robert Dudley, has spent the past year repairing BP’s reputation and safety record after an accident on an offshore rig caused the oil spill, while also seeking new exploration projects. BP plans to increase investments in exploration and focus on areas such as operations in the deep water and the management of giant oil fields. Some analysts have questioned whether that would be enough to restore BP’s share price to the level before the accident. The company’s shares traded Tuesday morning in London around 457 pence, or $2.85; they closed at 655.40 pence on April 20, 2010, the day of the explosion.

“This company has been steadied, turned around and now, this month, with high-margin assets returning onstream, we have reached a clear turning point,” Mr. Dudley said in a statement. “Our operations are regaining momentum and we are facing the future with great confidence.”

Mr. Dudley said he expected investments in new exploration projects and the end of payments to the Gulf of Mexico Trust Fund to increase cash flow by about 50 percent by 2014. The forecast is based on a oil price of $100 per barrel, compared to an average oil price for the first nine months of this year of about $112 per barrel.

Production levels improved particularly from Angola, the North Sea and the Gulf of Mexico, Mr. Dudley said. In a first sign that BP would be allowed to continue drilling in the gulf, the Obama administration last Friday approved BP’s plan for four exploration wells off the Louisiana coast.

It is still unclear how much BP will end up paying for costs related to the 2010 explosion on the Deepwater Horizon oil rig that killed 11 people and leaked billions of barrels of oil into the ocean. BP so far has put aside $41 billion to cover costs.

BP was the first major oil company to report third-quarter earnings this week. Royal Dutch Shell and Exxon Mobil are set to report figures on Thursday, followed by Chevron on Friday.

Also on Tuesday, BP named Brian Gilvary, 49, to become chief financial officer at the beginning of next year. He will replace Byron Grote, 63, who had been in the job since 2002. Mr. Grote is to remain on BP’s board as executive vice president of the corporate business activities. Mr. Gilvary is currently deputy group finance chief.

Article source: http://www.nytimes.com/2011/10/26/business/global/bp-earnings-slip-3-7-on-lower-production.html?partner=rss&emc=rss