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High prices, increased production power BP to record earnings Earnings up 136%, upstream shows huge gains, refining margins recover Allen Baker Petroleum News Contributing Writer
High prices amid war worries brought record profits for BP PLC in the first quarter. Earnings increased 136 percent to $3.73 billion, up from $1.58 billion a year ago. The result also was also a major improvement from the London-based company’s $2.64 billion in profit for the fourth quarter.
All that is on a pro forma basis, which subtracts special items and isn’t directly comparable with figures for U.S. companies.
Upstream operations were the big profit driver, as you would expect. Pro forma profits for that segment rose to $4.89 billion. That’s more than double the $2.40 billion of a year ago and up a third from the fourth quarter’s $3.67 billion.
Worldwide liquids production rose to 2,063,000 barrels a day, up 4 percent from 1,989,000 barrels a year ago and also up 1 percent from the fourth quarter.
U.S. liquids flow rose to 773,000 barrels daily, from 760,000 a year ago. That’s a gain of 2 percent. European and British production declined, while the “rest of world” category showed the big increase of 13 percent to 724,000 barrels daily.
Trinidad additions and BP’s bigger share of Russian Sidanko production made a difference here.
Deepwater Gulf of Mexico also contributed.
The company said recent discoveries came in Angola, Azerbaijan and the North Sea. High prices, high profits The big story for the quarter was what each barrel contained in profit.
Average oil price for the quarter was $29.82 a barrel. That was up 59 percent, or $11.05 a barrel, from $18.77 in the same quarter a year ago.
Putting it in perspective, the company would have collected $2.05 billion less if the liquids prices had merely matched last year’s. And that price increase is almost pure profit, once taxes are paid.
For Alaska North Slope crude, BP’s average price in the first quarter was $33.16 a barrel, up from $26.86 in the fourth quarter and $19.76 a year ago.
Production of natural gas also increased, reaching 9,017 million cubic feet daily. That’s a gain of 3 percent from a year ago and a rise of 1 percent from the fourth quarter.
Here again, prices provided the profit power, as BP’s average sale price for its gas rose $1.60 per thousand cubic feet, or 70 percent, to $3.87 per thousand cubic feet. That’s comparing the first quarter of this year and the first quarter of 2002. The price was up $1.00, or 35 percent, just from the fourth quarter number. Capital spending down Capital spending in the upstream was on the decline, however, especially in the United States.
Total E&P spending for capital projects and acquisitions was $2.14 billion in the first quarter, down 8 percent compared with the same quarter a year ago and down 17 percent from the fourth-quarter number.
In the U.S., capital spending slipped below $1 billion to $924 million in the first quarter. That’s a 17 percent drop from $1.17 billion a year ago.
Downstream recovery Refining and marketing made a respectable showing, as pro forma profits nearly tripled to $854 million from $287 million in the same quarter of 2002. It was also a nice gain from the $587 million in downstream profits for the fourth quarter.
Refinery throughputs rose a modest 1 percent -- compared with 2002’s first quarter -- to 3,024,000 barrels daily. But that number was a dip of 4 percent from the fourth quarter.
Margins rebounded, and that made the big difference. Average worldwide refining margin rose to $4.52 per barrel from $1.64 in the 2002 first quarter, and from $2.76 in the final quarter of that year. On the West Coast, margins hit $6.77 a barrel, up from $3.95 in the fourth quarter. Chemical weakness continues Higher volumes in the chemicals business didn’t make up for feedstock prices increases, and the sector showed pro forma profits of $139 million, flat with the fourth quarter and up 1 percent from a year ago.
For gas, power and renewables, the other big division for BP, profits rose 75 percent to $194 million from $111 million. That was the result of higher prices for natural gas liquids and improved marketing and trading results, according to BP.
BP doesn’t provide quarterly revenue figures.
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