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BP profits down 20 percent due to lower oil prices
Gas volumes grew in third quarter but overall liquids production continued to shrink, although U.S. production was up 7 percent Allen Baker PNA Contributing Writer
By Profits for BP PLC dropped 20 percent in the third quarter. The percentage drop was less than the figure for rivals ExxonMobil, down 29 percent, and Chevron, down 24 percent, but bigger than the decline at much-smaller Phillips, where profits dipped 15 percent.
London-based BP reported pro-forma earnings of $3.05 billion, down from $3.8 billion a year earlier and in the second quarter of this year. The company made $4.1 billion in the first quarter, but oil prices have been sliding since, and the direction of prices is likely to influence profits significantly in the quarters ahead.
“The critical issue, as we look forward, is whether OPEC will curb (members’) output sufficiently to pull the crude price back within its target range,” said BP chief executive John Browne in a statement with the earnings report.
He said natural gas prices appeared to be settling at more normal levels, at least for the moment, while refining margins were likely to weaken and chemical profits would remain low due to weak demand and excess capacity.
BP’s production of liquids continued to shrink, to a daily average of 1,883,000 barrels in the third quarter, down marginally from the second quarter’s 1,885,000 and a 1 percent reduction from the 1,902,000 barrels in the third quarter of 2000.
U.S. liquids production down 12 percent U.S. production was up 7 percent to 741,000 barrels daily, about even with the second quarter number, and European extraction was up a bit as well, at least outside the United Kingdom. But U.K. fields yielded 12 percent less than they did a year ago, and the rest of the world brought in a bit less.
Gas volumes grew to take up the slack and more, however, with the company reporting a 3 percent increase in overall oil and gas production compared with the year-ago period.
On the gas side, BP produced 8,319 million cubic feet daily in the third quarter, up 7 percent from the 7,797 million cubic feet brought to the surface daily in the same quarter of 2000. The third-quarter production was down 3 percent, however, from the second quarter average volume of 8,554 million cubic feet daily.
Prices, of course, are down from a year ago.
Crude and natural gas liquids brought an average of $23.08 per barrel in the quarter, down 17 percent from the $27.84 BP got in the same period a year ago. Natural gas was sold for $2.49 per thousand cubic feet, also down 17 percent from the $3.01 BP received a year earlier.
The exploration and production segment brought in profits of $3.07 billion in the quarter, down 26 percent – more than a billion dollars – from the $4.16 billion a year earlier. Earnings from refining and marketing were up 2 percent to $1.29 billion.
Gas and power profits were essentially flat at $130 million, while chemical earnings were cut by more than half – 68 percent – to $113 million. That was a big improvement from the chemical segment’s $9 million profit in the second quarter, however.
BP doesn’t report quarterly revenues.
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