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British energy giant BP said today that its net profit slid 34 per cent in the third quarter, mainly as a result of lower refining margins.
BP, which remains weighed down by huge compensation payouts linked to the Gulf of Mexico oil spill disaster in 2010, said its profit after tax had tumbled to $3.5 billion (2.54 billion euros) in the three months to the end of September compared with the third quarter in 2012.
The group’s replacement cost profit — the current accounting figure which excludes changes in the value of oil inventories — dropped to $3.18 billion. Production fell 2.3 per cent, it revealed in an earnings statement.
BP added that charges incurred by the group as a result of the Gulf of Mexico oil spill disaster in 2010 currently stood at $42.5 billion.
“Compared with 2012, the third-quarter result was significantly impacted by weaker refining margins, particularly in the US, as well as the absence of earnings from the divested Texas City and Carson refineries, each of which delivered unusually strong results in the third quarter of 2012,” BP said.
The group has so far agreed to sell $38 billion worth of assets to help pay for cleaning up and for compensation following the spill disaster.
Today, it added that it planned new disposals aimed at bringing in a further $10 billion by the end of 2015, although the proceeds would be used mainly to buy back shares.
“The strong operational progress we are now seeing across the group, combined with our focus on disciplined investment, also underpins our confidence in growing long-term sustainable free cash flow and being able to increase shareholder distributions,” BP chief executive Bob Dudley said today.
Despite the sizeable drop in earnings, BP shares topped London’s benchmark FTSE 100 index in morning deals, rising 3.76 per cent to 469.1 pence. The FTSE was up 0.36 per cent overall to 6,750.31 points.
“BP has surprised to the upside. Profit has exceeded forecasts, whilst news of an increase in the dividend payment is greatly welcomed” by investors, said Keith Bowman, equity analyst at Hargreaves Lansdown Stockbrokers.
“On the downside, the Gulf of Mexico accident still overhangs, headline production has again declined, as business sales continued, whilst weaker refining margins, particularly in the US, further impacted.”
BP, seeking to reposition itself amid ongoing compensation payouts, agreed last year to a massive strategic deal with the main Russian oil producer Rosneft.
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