BP expects 17% jump in oil and gas output

The Associated Press

BP PLC indicated July 2 that its profit would surge in the second quarter thanks to a 17 percent increase in its oil and natural gas output and to sharply higher sales prices.

London-based BP credited its Russian operations for all the predicted growth in oil and gas production during the three months ending June 30, in a trading statement issued ahead of quarterly financial results to be announced later this month.

BP expected oil and gas production — its main business — to average 3.95 million barrels of oil equivalent per day in the second quarter, up from 3.37 million barrels a year ago. At the same time, it noted a 36 percent rise in the benchmark Brent crude oil price over the past 12 months to US$35.32 a barrel. U.S. prices for natural gas also rose.

Non-Russian production slipped compared to the first quarter, due to planned maintenance at facilities in Alaska, the Middle East and the North Sea, along with an unplanned shutdown of its large Mars platform in the Gulf of Mexico and a seasonal ebb in European demand for gas.

However, BP’s Russian joint venture TNK-BP, including Slavneft, pumped an average of 890 million barrels of oil equivalent per day in the second quarter, up 31 percent from last year.

Profit margins in BP’s refining business fattened up as well, particularly on the U.S. West Coast where the so-called indicator margin jumped by 143 percent to US$15.41 per barrel.

BP said this improvement in margins wouldn’t necessarily show up in its refining sales, in part because of higher energy costs that aren’t reflected in the indicator margins.

In its chemicals business, margins and volumes both rose from the first quarter, but gains compared to last year were offset by higher energy costs and the effects of fluctuating currencies, BP said.