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BP shows slight gain in profits, doesn’t match rivals Earnings barely rose for fourth quarter, while ExxonMobil showed 63 percent gain in same period Allen Baker Petroleum News Contributing writer (Houston)
BP PLC failed to match its big U.S. rivals in announcing its fourth-quarter profits on Feb. 10, and the stock cratered sharply on that date before rebounding somewhat as OPEC announced a production curb. Analysts had been expecting better.
For the fourth quarter, the big London firm’s earnings reached $2,667 million, up just 1 percent from the $2,635 million the company reported a year earlier, on a pro forma basis. That slim gain came despite the fact that BP collected $2.52 more per barrel of liquids and 31 cents more for each thousand cubic feet of natural gas.
Compare that with ExxonMobil’s earnings boost of 63 percent, or ChevronTexaco’s 92 percent gain. BP did show a better performance than European giant Royal Dutch Shell, where profits dropped 19 percent for the quarter. Weak U.S. upstream BP’s weakness showed up particularly in its upstream operations in the United States, where fourth quarter operating profit on a replacement cost basis slid by 37 percent to $680 million compared with $1,081 million the same quarter a year earlier. Put the results up against the third quarter, and the comparison is even worse — profits were less than half of the $1,368 million that segment produced just the quarter before.
The company did take a major charge of $296 million against four properties in the Gulf of Mexico shelf following technical reassessments.
The European E&P business also showed a big drop from a year ago, sliding 27 percent to $700 million from $965 million a year earlier. For the rest of Europe, a much smaller operation, profits dipped 14 percent to $152 million.
Only in the “rest of world” category did BP’s E&P operation show an improvement, as the TNK-BP joint venture helped boost profits by 37 percent increase to $1,406 million, compared with the same period a year earlier. But there was still a 3 percent decline from the third quarter in the “rest of world” category.
Liquids production worldwide rose an impressive 20 percent for the quarter to 2,454,000 barrels a day. But gas flows slid 4 percent to 8,600 million cubic feet daily.
For the year, the big E&P operation showed earnings, on a replacement cost basis, of $13,937 million, up 51 percent over the number for 2002. Record annual net BP touted its showing for the whole year of 2003, with pro forma profits rising 42 percent to $12,319 million. But compare that with ExxonMobil, and it doesn’t sound nearly as impressive. The biggest private industry player boosted its profits 88 percent in 2003 to $21,510 million.
Looking at it another way, ExxonMobil’s profits for 2002 were 31 percent higher than BP’s. For 2003, the big U.S. operation had profits that were 74 percent more. Reserve replacement slim BP reported replacing 122 percent of its production through discoveries, extensions, revisions and improved recovery, but that number was a sharp decline from recent years when the company has replaced more than 160 percent of reserves internally.
Factor in BP’s acquisitions and disposals, and the figure looks a little better, with additions overall amounting to 158 percent of 2003 production. R&M gain for quarter BP’s refining and marketing operations showed a major earnings improvement in the quarter. Profits on a replacement cost basis were $365 million, against a loss of $36 million a year earlier. For the year, profits from the business rose 168 percent to $3,689 million.
Refinery throughput slipped 4.5 percent for the quarter due to disposal of assets. The same percentage decline was reflected in the U.S. operation, which represents about 45 percent of the total. Worldwide, throughput was 3,014 million barrels daily.
Refining availability slipped a bit to 94.9 percent in the fourth quarter from 96.1 percent in the same period of 2002.
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