A pair of unique items on the BP plc balance sheet is making it difficult to tell exactly how well the company performed in Alaska in 2012, but the financial figures make one thing clear: continued production declines ate into revenues for the company last year.
BP Exploration (Alaska) Inc. earned more than $3.7 billion in 2012. The subsidiary of the London-based oil giant earned just $1.4 billion in 2011, but the huge jump from year-to-year is almost entirely attributable to a $3.5 billion item on the balance sheet reporting “gains on sale of businesses and fixed assets” outside Alaska, according to the company.
While the parent company BP plc usually breaks out financial information for BP Exploration (Alaska) in its annual 20F filing, the numbers also includes information from BP Exploration (Alaska) subsidiaries, some of which conduct business outside the state.
Even accounting for the sale, the 2012 balance sheet is further obscured by a nearly $1 billion impairment BP took in the second quarter after suspending its Liberty project.
Production, sales, taxesFor a better sense of how development activities, commodity prices and the Alaska fiscal regime impacted BP in 2012, it is better to look at production levels, sales and taxes.
BP produced some 139,000 barrels of oil per day in Alaska in 2012, down 9.1 percent from some 153,000 bpd in 2011 after dropping 7.8 percent between 2010 and 2011.
The declines came largely from smaller properties, though. The Prudhoe Bay field produced 77,000 bpd in 2012, down only 1.3 percent from 2011, while Milne Point produced 15,000 bpd in 2012, down more than 21 percent from 2011, and “other fields” including Northstar and Endicott produced 11,000 bpd, down 35 percent from 2011.
BP also produced some 18 million cubic feet of natural gas per day in Alaska last year, down from 22 million cubic feet per day in 2011 and 46 million cubic feet per day in 2010. With operations limited to the North Slope, BP’s natural gas operations are limited to industrial uses.
The operator of the Prudhoe Bay field reported some $5.5 billion in sales and operating revenues in 2012, down from $6.1 billion in 2011 but up from $4.8 billion in 2010.
As would be expected with a drop in sales, taxes also fell year-over-year. BP Exploration (Alaska) paid some $1.5 billion in taxes in 2012, down from some $2.4 billion in 2011.