A Review of the Nigerian Energy Industry

BP records $1.4bn second quarter loss

31 July 2012, Sweetcrude, LONDON – BRITISH Petroleum, BP, recorded a loss of nearly $1.4 billion during the second quarter of the year, resulting from lower output and weaker commodity prices.

This is in contrast with its profit of more than $5.7 billion during the same period last year.

The second quarter result was affected by losses of nearly $4.8 billion which the UK supermajor said was related mainly to certain refineries, US shale gas assets and the decision to suspend the Liberty project in Alaska.

Underlying replacement cost profit for the period, which is adjusted for non-operating items and fair value accounting effects, totaled $3.7 billion which was still well below the $5.7 billion booked a year earlier.

Also, a dip in revenue dragged down profitability. The company generated $94.9 billion during the three months to 30 June, down from $103.9 billion during the second quarter of 2011.

BP attributed the decline to weaker oil and US gas prices combined with a fall in output and lower net income from TNK-BP.

It noted that net income from TNK-BP during the quarter totaled $700 million, which BP said was below the amount the Russian joint venture brought in during the first quarter of the year due to “a rapid fall in oil prices” which was amplified by the lag in Russian oil export duty which it said was based on earlier higher prices.

Output during the quarter, excluding TNK-BP, averaged about 2.3 million barrels of oil equivalent per day, compared to nearly 2.5 million boepd during the second quarter of 2011.

BP attributed the fall to planned downtime in the higher-margin Gulf of Mexico and in Trinidad but noted it was partly offset by production in India and start-ups in Angola and Trinidad.

The company warned that it expected third quarter output to be slightly lower as its turnaround and maintenance programme continues but said it expected production to rise in the fourth quarter.

BP’s share of TNK-BP production was up slightly in the second quarter, averaging 1 million boepd, compared to about 976,000 boepd in the second quarter of 2011.

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