Liberty contributes to dismal BP results

BP’s results for the second quarter of 2012, with replacement cost profits dropping to $3.7 billion from $5.7 billion in the same period last year, have disappointed many analysts, despite widespread expectations of a drop in earnings as oil and U.S. natural gas prices fall. Company executives put a brave face on the situation, as the company tries to recover from the aftermath of the Deepwater Horizon disaster and to resolve continuing problems in its relationship with its Russian joint venture, TNK-BP.

In his opening remarks for a July 31 analyst webcast, BP Group Chief Executive Bob Dudley said that, in addition to several adverse impacts from a sharp decline in oil prices, a large planned maintenance program in the company’s facilities in the Gulf of Mexico has impacted the company’s results.

“While I am not satisfied with the 2Q results we are in the midst of a major transformation which will take some time,” Dudley said “As we deliver this transformation we are committed to generating sustainable efficiencies in our operations.”

The second quarter results include a non-operating impairment charge of $4.8 billion. BP says that $2.1 billion of this charge relates to a write down of U.S. shale gas assets and the suspension of the Liberty oil field project in Alaska’s Beaufort Sea. The remaining $2.7 billion relates to the company’s refining portfolio, predominantly in the United States.

In a July 31 press release BP says that it anticipates improved cash flow in coming years as new production comes on line in the Gulf of Mexico and offshore Angola, and as payments into the trust fund for Gulf of Mexico claims are completed.

—Alan Bailey