BP profits fell short of analyst expectations, showing that the company has a way to go in recovering from last year's Gulf of Mexico disaster.
BP results show spill still hurts
BP is still pulling itself clear of the Gulf of Mexico disaster.
Yesterday, the British oil giant reported profit of US$5.6 billion (Dh20.56bn) for the April-June quarter, below the $6bn most analysts had been predicting.
The results come one year after the company capped the Macondo oil well that caused one of the biggest environmental disasters in recent memory.
"We expected 2011 to be a year of consolidation as we reset the focus of the company," said Bob Dudley, the chief executive of BP. "This is going well, while it is having the expected near-term impact on our volumes and costs."
Costs related to the spill are expected to top $40bn. To make cash available, BP has sold $25bn of assets and plans to raise $5bn more through additional assets sales by the end of this year.
Among other assets, it plans to off-load a refinery in Texas City that has been the site of several industrial accidents.
The company's consolidation has led to an 11 per cent slide in overall production from levels at the start of last year.
That has given BP less of a chance to reap the rewards of higher oil prices, which are expected to boost earnings at competitors Royal Dutch Shell and ExxonMobil by 50 per cent over the same period last year. For the past three months, Brent crude, the European benchmark, has traded comfortably above $100 a barrel.
Mr Dudley said new projects in Angola and the North Sea, and a return to the Gulf of Mexico, would help BP to recover over the next three years.
"They have their work cut out for them, but are doing the right things," said Christine Tiscareno, an equity analyst at Standard & Poor's in London.
BP shares traded slightly lower at 461.5 pence shortly after the results were announced yesterday morning.
So far, BP has paid $8.6bn towards a $20bn fund announced in the aftermath of the spill. In May, Mitsui, a partner in the Macondo well, agreed to contribute $1.1bn, and the oil services company Weatherford put in $75 million.
BP acknowledged that the effects of the spill could be relatively long lasting.
"The Gulf of Mexico oil spill has damaged BP's reputation, which may have a long-term impact on the group's ability to access new opportunities, both in the US and elsewhere," the company said in its second-quarter report.
"Adverse public, political and industry sentiment towards BP, and towards oil and gas drilling activities generally, could damage or impair our existing commercial relationships."
* with Bloomberg News