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BP profit declines 13 percent on continued downstream woes Oil and gas flows up 4% in quarter despite significant production problems Allen Baker PNA Contributing Writer
BP PLC reported third-quarter income of $2.29 billion on a pro forma basis, down 13 percent from $2.65 billion in the third quarter of last year. On that same pro forma basis, which subtracts special items, the London company made $2.18 billion in the second quarter of this year.
Refining and marketing was the weak sector, as it’s been for some time in the industry. Downstream profit slid 60 percent, or $767 million, to $522 million for the quarter.
Refinery throughput rose 5 percent to 3.15 million barrels daily in the quarter, due to the Veba acquisition and better availability, the company said. But U.S. refinery runs slipped 7 percent to 1.46 million barrels of crude as the company sold three small refineries. The big difference was a reduction in refining margins to $1.98 per barrel from $3.83. That’s a 48 percent drop. Retail margins were also thinner, particularly in the United States.
Production up slightly In the giant upstream sector, operating profits were down just a score of millions, or 1 percent, to $3.05 billion. The company took some $703 million in special charges in E&P, including impairments at Badami in Alaska and other fields after technical reassessments lowered their future prospects. Prices made up much of the difference.
Liquids production rose 5 percent to 1,983,000 barrels daily from 1,883,000 a year ago, reflecting new production from Northstar in Alaska and other fields. Natural gas flows grew 2 percent to 8.48 billion cubic feet a day.
Compared with the second quarter, however, overall production was down 3 percent to 3.45 million barrels of oil equivalent daily from 3.55 million barrels.
Lower output target That’s a reflection of some problems cropping up that will, according to BP executives, mean lowering the target for production gains by year-end to 3 percent from the 5.5 percent figure the company was projecting just a few months ago.
Performance problems in Alaska and the North Sea cut about 50,000 daily barrels. OPEC curbs reduced production by about 30,000 barrels, and strong Gulf of Mexico storms meant a 20,000-barrel cutback there, according to BP chief executive Lord John Browne and others. All told, that means a loss of 100,000 daily barrels of oil equivalent.
Overall, Browne says, organic growth should add 200,000 barrels a day this year, while base production will decline by 50,000 barrels a day and the increased stake in Sidanco will add 40,000 daily barrels.
Prices keep profits high Liquids prices averaged $24.40 a barrel in the quarter, up 6 percent from $23.08 in the third quarter of 2001. That was also a significant improvement from the $22.81 figure in the second quarter of this year.
Natural gas brought an average of $2.25 per thousand cubic feet. That was down 10 percent from $2.490 a year earlier.
Chemical earnings rise The chemicals segment has recovered somewhat, with third-quarter profits there of $272 million, up 141 percent from $113 million in the same quarter a year ago. That was a slight increase from the second-quarter profit of $246 million. BP says a lower cost structure led to the improved results. Overall chemical production was up 15 percent, with some of that due to acquisitions.
In the gas, power and renewables division, profits were down 30 percent for the quarter to $87 million. That was due almost entirely to revaluing a cogeneration power plant in Great Britain. BP did add a couple of agreements to supply liquefied natural gas to China from offshore Australia and Indonesia.
BP doesn’t report revenue figures on a quarterly basis.
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