BP profits plunge in second quarter

Troubled oil giant BP has reported a 96p slump in “replacement cost profit” for the three months to the end of June.

Profits for the second quarter were down to $3.7billion (£2.3billion) compared to $5.7billion (£3.6billion) for the same period in 2011.

Production, excluding output from the Russian TNK-BP venture, fell 8% to 2.3m barrels of oil equivalent a day and is expected to fall again in the third quarter.

BP attributed the drop to “weaker oil and US gas prices together with reductions in output due to extensive planned maintenance, particularly affecting high-margin production from the Gulf of Mexico”

Profits were also reduced by reductions in value of its US shale gas assets and certain refineries in the company’s portfolio.

The decision to suspend the Liberty offshore oil project in Alaska and continued payments into the Gulf of Mexico Trust Fund also further eroded profits. In total, the “impairment charges” faced by BP totalled $4.8billion (£3billion).

Bob Dudley, BP group chief executive, said: “We recognise this was a weak earnings quarter, driven by a combination of factors affecting both the sector and BP specifically.

“Moving into 2013, we expect earnings momentum to build as we complete payments into the Trust Fund, as high-value production comes back on line, and as the impact of new projects ramps up.”

As the markets opened, BP shares were down 14p, or 3.1%, to 430p.

Ryan Fowler