Oil price strength boosts BP’s H1 2004 profits
UK-based oil and gas major BP has posted second quarter profits of $3.91 billion (£2.12 billion) after amortisation and disposals - an increase of 23% on the same period in 2003 - resulting in a half-year profit of $8.63 billion, compared with $7.21 billion last year.
The company attributed the increase to the high oil prices seen in global markets in the second quarter, as well as increased production from the company’s Russian division - with BP’s exploration and production (E&P) division recording an 18% increase in year-on-year results for the second quarter. However, the results were at the lower end of market analysts’ expectations, and the company’s shares
dipped slightly in early trading as a result.
With the E&P division recording profits of $4.56 billion, BP’s gas, power and renewables business reported a 53% year-on-year increase in second quarter profits - the company citing the increased contribution from its North American natural gas liquids business. The gas, power and renewables arm reported profits of $216 million, and also noted increased liqufied natural gas (LNG) sales as a contributing factor in the growth.
Total natural gas production in the second quarter was largely unchanged on 2003’s level of 8.439 billion cubic feet per day (bcf/d), with production in Q2 ‘04 at 8.425 bcf/d. However, increased production from Russia through the company’s TNK-BP division helped to boost oil output, despite lower production due to divestments and reduced flows from the North Sea, Gulf of Mexico and Trinidad. Production from TNK-BP was 891 million barrels of oil equivalent - a 7% increase on the levels seen in the first three months of the year.
Noting that it was six years since the company’s acquisition of Amoco and five years since its acquisition of Arco, the company’s chief executive Lord Browne said in a press conference on the results that BP had yet to reach its full potential, adding that the company “had the ability to deliver shareholder value from the base that we have created”.
On the issue of reserve reporting, Browne added that in submitting BP’s reserve estimates to the US Securities and Exchange Commission (SEC), the regulatory body’s rules had been fully applied.
However, addressing the company’s shareholders and investors, he said: “We understand your concerns on reserves, and we support international moves to improve comparability...on ways of estimating reserves”.
Questioned on the applicability of SEC reporting standards, Browne added that he viewed the rules as “a little out of touch with what we are doing as an industry as a whole”, but expressed optimism that “one day, we will get conformance” between the “different languages” of reporting standards. CL
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