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Low oil prices drain BP Amoco profit 47 percent in first quarter The company’s profit slide compares with a 40 percent first quarter drop at Exxon Corp. and a 26 percent fall at Royal Dutch Shell Petroleum News Alaska
BP Amoco reported May 11 its operating profits fell 47 percent during the first quarter because of low prices for crude oil.
The oil company said it had operating profits of $677 million, down from $1.28 billion a year earlier. When one-time items, including a $860 million restructuring charge, are included, BP lost $183 million, compared to earnings of $1.33 billion a year earlier.
The restructuring charge was related to British Petroleum’s purchase last year of Chicago-based Amoco Corp.
BP Amoco said higher sales volumes in all its business segments helped offset the lower prices for oil, which took a toll on profits throughout the oil industry
Prices have rallied following Organization of Petroleum Exporting Countries’s mid-March agreement to curtail output, but the improvement came too late to affect first-quarter results.
Chief executive John Browne said the company is seeing benefits from the merger trickling down to the bottom line. “This is a good debut result for BP Amoco in a tough environment,” he said.
The group’s exploration and production division saw operating profit decline 26 percent to $904 million, after adjustment for special charges of $86 million. Lower prices for oil and natural gas were somewhat offset by lower costs, the company said.
In refining and marketing, weaker market conditions outweighed cost reductions and higher sales volumes to trigger a 33 percent drop in adjusted operating profit.
Fewer plant shutdowns and greater volumes helped the chemicals business improve from last year’s fourth quarter. However, adjusted operating profit of $217 million marked a 37 percent drop from the first three months of 1998.
BP Amoco is Britain’s largest company by market value after the Amoco takeover and the world’s No. 2 oil company by value. The company’s profit slide compares with a 40 percent first quarter drop at Exxon Corp., No. 1 in the world by value, and a 26 percent fall at No. 3 Royal Dutch Shell.
—The Associated Press contributed to this article
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