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BP Profit Slips

Published: October 30, 2012 | 8:19 am
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LONDON–BP BP.LN +3.29% PLC Tuesday posted a fall of 5.4% in adjusted profit for the third quarter due to seasonal maintenance in the North Sea and Alaska and the impact of Hurricane Isaac in the Gulf of Mexico, both of which crimped oil and gas output.

However, the company’s earnings still came in ahead of analysts’ expectations and BP raised its dividend in what it described as gesture of confidence about the future.

BP’s better-than-expected performance comes as a torrid period for the company may be drawing to a close. It struck a deal last week to extract itself from its troublesome Russian joint venture, TNK-BP, by selling its half of the company to OAO Rosneft. The deal cements BP’s long-term presence in the country as a major Rosneft shareholder.

The 12.5% increase in BP’s quarterly dividend to 9 cents a share, payable in the fourth quarter, comes as BP moves closer to settling on a figure for civil and criminal liabilities for the disastrous Deepwater Horizon oil spill in the Gulf of Mexico, people familiar with the matter told The Wall Street Journal earlier this month.

BP suspended its dividend in 2010, during the aftermath of the spill, and resumed the payment at a much lower level in 2011. It has taken charges totaling $38.1 billion for the cost of the spill so far.

“The strong progress we are making in transforming the company gives us the confidence to increase distributions to our shareholders,” said BP Chief Executive Bob Dudley. “We are on track with our strategy to 2014 and are laying the right foundations for sustainable growth during the coming decade.”

BP said its clean replacement cost profit, a figure that is watched closely by analysts because it strips out changes in the value of inventories and does not include one-off gains or losses, was $5.17 billion, down from $5.46 billion in the same quarter a year earlier.

This was 26.5% higher than expectations of $4.09 billion in a Dow Jones Newswires poll of 11 analysts.

The London-based energy giant posted a net profit for the three months to Sept. 30 of $5.43 billion, up 7.8% from $5.04 billion for the third quarter of 2011.

Total oil and gas production was 2.259 million barrels of oil equivalent a day, a decline of 2.7% on the year from 2.321 million barrels of oil equivalent a day, due to the cumulative effect of asset sales and an extended maintenance program in the Gulf of Mexico.

Total revenue for the third quarter fell 4.7% to $93.12 billion, from $97.73 billion in the same period in 2011.

Diluted earnings per share were 28.39 cents, compared with 26.28 cents the previous year.

wsj

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