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BP shows higher earnings as prices, flows improve Profits rise by 49 percent for quarter despite lower downstream results; Alaska oil production up 9 percent due to North Slope’s Northstar field Allen Baker PNA Contributing Writer
BP PLC reported income of $2.64 billion for the fourth quarter on a pro forma basis, up 49 percent from the results a year ago. The London-based company made $2.29 billion in the third quarter. The pro forma measurement subtracts special items, so it’s not directly comparable with results for U.S. companies.
For the year, pro forma profit was $8.72 billion, down 25 percent from $11.56 billion in 2001.
Refining and marketing remained weak in the fourth quarter, but upstream, higher prices and more production helped the company’s results.
E&P earnings rise Operating earnings for the exploration and production segment rose 54 percent to $3.67 billion, compared with $2.37 billion a year ago, on a pro forma basis. The figure was also a nice bump from $3.05 billion in the third quarter. For the year, though, E&P brought in $12.01 billion, down 17 percent from 2001.
Worldwide liquids production for the quarter was 2,049,000 barrels a day, up 2 percent from the same quarter a year ago and a gain of 3 percent compared with the third period of this year. For the year, average liquids production was 2,018,000 barrels daily, up 4.5 percent from 2001.
North American flows were down 2 percent from a year ago, though, at 756,000 barrels compared with 772,000 barrels in the fourth quarter of 2001. The annual average, however, was up 3 percent to 765,000 barrels daily, a gain of 21,000 barrels from a year ago.
Alaska production up 9 percent That corresponds fairly closely with the gain in Alaska production, notably from Northstar. The company’s North Slope operations produced an average of 317,000 barrels daily in 2002, according to BP Alaska spokesman Daren Beaudo, up 27,000 barrels, or 9 percent from the 2001 figure.
So elsewhere in the nation, BP’s production fell by 6,000 barrels a day. Alaska provided 41 percent of BP’s U.S. liquids in 2002.
On the gas side, production was up 2 percent from the year-ago quarter to 8.94 billion cubic feet daily. The figure was a 5 percent gain from the third quarter. For the year, BP brought in 8.71 billion cubic feet a day, a gain of just 1 percent from the 2001 number.
U.S. upstream power Breaking out the U.S. numbers, BP showed an operating profit from E&P of $1.08 billion for the quarter, up 150 percent from the $426 million in the same period of 2001. That’s on a replacement cost basis.
Other U.S. operations showed a loss, however, based on the reported quarterly earnings of $957 million from U.S. operations in total.
The company made a big step toward future production gains with a huge investment in Russian oil announced in conjunction with the earnings numbers. BP is planning to invest $6.75 billion over four years, $3 billion of it in cash up front, to form a new Russian company in which BP will have a 50-percent stake. (See story on page 9.) The new combination will have daily crude production of 1.2 million barrels, and reserves of 5.2 billion barrels.
Higher prices help Higher oil prices helped in the fourth quarter, with a barrel of oil bringing $24.78, up 40 percent from the same quarter of 2001. For North Slope crude delivered to the West Coast, the average industry wide price in the fourth quarter was $26.86, up 51 percent from the same quarter a year earlier. For BP’s U.S. operations overall, however, the average was considerably lower at $23.28 a barrel.
BP’s average sale of natural gas yielded $2.87 per thousand cubic feet, an improvement of 26 percent over the figure in he final quarter of 2001. The full-year average was $2.46, down 25 percent from 2001’s average of $3.30.
Capital spending in the sector was $2.57 billion for the quarter, compared with $2.15 billion in 2001’s fourth period. Of that, $1.08 billion was spent in the U.S., up 25 percent from $862 million a year ago.
For the year, E&P capital spending was $9.70 billion, up 9 percent from 2001 and just over half of the company’s total capital spending of $19.11 billion. The companywide figure rose just short of $5 billion over 2001.
Downstream still weak Refining and marketing continued to lag in the fourth quarter, with operating earnings of just $587 million on a pro forma basis, down 25 percent from the year-ago period. With special items and merger amortization, the sector actually had a loss of $36 million in the quarter. The results reflected lower margins for West Coast refining and lower margins in the retail end over the whole U.S. market, BP executives said.
For all of 2002, downstream pro forma earnings were $2.08 billion. That’s down 57 percent from the 2001 figure.
Refinery throughput rose 11 percent to 3,157,000 barrels a day due to the Veba acquisition and fewer maintenance shutdowns in the U.S. operations.
Chemical profits decline With higher prices for petroleum feedstocks, the chemical sector was weak, though improved from the year-ago quarter. Chemical had pro forma earnings of $139 million in the fourth quarter. That was barely half of the $272 million that sector made in the prior quarter, but more than three times the $39 million total for the fourth quarter of 2001.
The gas, power and renewables division had earnings of $72 million, down from $102 million a year earlier and down from $87 million in the third quarter.
BP announced with its earnings that the company is planning to repurchase $2 billion worth of its stock.
BP doesn’t provide revenue figures in its quarterly reports.
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