BP Profits Down for Second Quarter 2012

BP today has posted a drop in profits for the second quarter of this year, a result it says has been contributed to by low US oil and gas prices, lower income from TNK-BP and lowered production resulting from planned maintenance, particularly at the Gulf of Mexico.

These factors have produced a massive drop in profit for the company, down to $3.7 billion for the second quarter in 2012, compared with $5.7 billion for the same period in 2011 and $4.8 billion for the first quarter of 2012.

Income from TNK-BP, the massive and troubled Russian joint venture in which BP has a 50 per cent stake, was significantly down for the second quarter, decreasing by $700 million from the first quarter of this year. The company puts this drop in income down to a rapid fall in oil prices driven "amplified by the lag in Russian oil export duty", a statement today said. However, the company says that it expects this lag to be somewhat turned around for the third quarter of this year, based on current Urals prices.

BP CEO Bob Dudley said today that while earnings were down, partly due to extensive maintenance operations, the maintenance was essential and necessary.

"We recognise this was a weak earnings quarter, driven by a combination of factors affecting both the sector and BP specifically," he said.  

"The effects of price movements have impacted our earnings in the quarter. Our extensive turnaround and maintenance programme, which will continue into the third quarter, is also affecting some aspects of our near term results. All of this will take time, but it is important investment that will enhance safety and reliability for the long term. As we deliver this major transformation, we are also committed to generating sustainable efficiencies in our operations."

The company also said that it was nearing completion of its contributions into the Trust Fund, a compensatory fund set up in the wake of the Gulf of Mexico disaster, a measure which is expected to be completed by the end of the year.

"Moving into 2013, we expect earnings momentum to build as we complete payments into the Trust Fund, as high-value production comes back on line, and as the impact of new projects ramps up," Mr. Dudley said.