BP today posted a larger-than-expected fall in profits as the oil giant continues to feel the impact of the US Gulf of Mexico disaster.
The firm was squeezed by a 6% fall in production to 2.45million barrels of oil equivalent per day in the first quarter of this year, excluding its Russian TNK-BP business, compared to the same period in 2011.
It said this was due to lower production in the Gulf of Mexico, still hit by the 2011 incident, higher upstream costs and assets that had been sold in order to fund payments to those impacted by the Macondo catastrophe and environmental costs.
Profits were also hit on the refinery and marketing side of the business, down to £553million from £1.3billion in the first quarter of 2011, due to weaker demand for fuels.
BP said work in the Gulf of Mexico was now ramping up, with five rigs active at the moment and eight due to be active in the region by the end of the year.
Group chief executive Bob Dudley added: “We have made a good start against our strategic priorities for 2012.
“During the quarter we gained access to significant new deepwater and US shale exploration acreage, our ongoing divestment programme has reached £14billion and we have five deepwater rigs at work in the Gulf of Mexico.
“This operational progress will underpin the financial momentum we expect to come through as we move into 2013 and 2014.”
However, chief finance officer Brian Gilvary predicted second quarter production would be lower again and full-year output flat on 2011.
In the North Sea, BP recently announced the sale of its southern North Sea business to French independent Perenco for £246million in cash. The deal – due to complete by the end of the year – allows BP to focus on high growth projects in the northern sector, particularly west of Shetland.
Total revenue for the first quarter came in at £59.4billion, compared with £54.3 billion a year earlier, with replacement cost profits – an industry measure – down by around £400million at just under £3billion, below market expectations.
Pre-tax profits in the latest period were £5.4billion, down from £6.9 billion in the first quarter of 2011.
Analysts at Citigroup said upstream costs rose due to measures BP had taken to address safety concerns following the Macondo blow-out.
Last month, BP reached a proposed settlement with the US Department of Justice over the Gulf of Mexico incident. This could cost it £4.7billion, the firm said today.
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