BP posts 35 percent rise in quarterly profit to $3.43 billion

Soaring oil and natural gas prices together with fatter profit margins in refining drove BP PLC’s second-quarter earnings higher by 35 per cent.

The London-based company posted a profit of $3.43 billion for the three months ending June 30, up from $2.54 billion during the same quarter of 2003, BP said July 27. BP reported pro forma net profit, which the company said excludes losses or gains from the sale of assets or termination of operations, of $3.91 billion, up from $3.17 billion a year ago.

The results came in slightly below market expectations for $4.14 billion, based on an average of eight analysts’ forecasts compiled by Dow Jones Newswires.

Quarterly sales rose to $71.2 billion, compared to $54.8 billion for the same period last year.

The strong profit gains came largely on the back of higher oil and gas prices. The price of benchmark North Sea Brent crude averaged $35.32 a barrel in the second quarter — 38 per cent higher than last year and the highest of any quarter for more than 20 years, BP chief executive John Browne said in a statement.

Continued supply constraints among members of the Organization of Petroleum Exporting Countries along with steady growth in demand should keep oil prices firm, Browne said.

BP expected global economic growth to continue, noting momentum in Japan and signs of recovery in Europe. However, the pace of economic activity in the United States appeared to be easing, and the Chinese government was taking steps to try to cool the sizzling growth in China, he added.

BP’s biggest business — exploration and production — saw second-quarter sales volumes increase by 18 per cent to 3.97 million barrels of oil equivalent a day. All the growth came from Russia, where BP formed its TNK-BP joint venture last year.

The Russian contribution offset declines in output elsewhere due to sales of assets, lower seasonal gas production in the North Sea, and unplanned shutdowns at facilities in the large Mars field in the Gulf of Mexico and at a field in Trinidad. Pro forma earnings from exploration and production jumped to $4.56 billion from $3.86 billion.

For the first six months of the year, BP’s profit grew to $7.6 billion, from $5.96 billion in 2003.