A Review of the Nigerian Energy Industry

BP sees profits fall

BP+Logo29 October 2013, News Wires – UK supermajor BP saw profits fall in the third quarter of the year despite a rise in revenue as expenses increased.

Profit for the three months to 30 September came in at just under $3.6 billion, compared to a more than $5.3 billion profit booked during the third quarter of 2012.

This came despite revenues and other income rising from $94.4 billion a year ago to $98.2 billion during the recent quarter.

Offsetting the rise in revenue was an increase in costs related to purchases which rose from $69.4 billion a year ago to $76.6 billion in the third quarter of 2013.

Exploration expenses were also higher in the most recent quarter, totalling $511 million, compared to $290 million a year earlier.

Underlying replacement cost profit, which is adjusted for non-operating items and fair value accounting effects, for the recent quarter came in at $3.7 billion, however this was still lower than 2012’s third quarter underlying replacement cost profit of $5 billion.

BP’s upstream business segment’s pre-tax profit totalled nearly $4.2 billion, compared to $4.9 billion a year ago which the company said reflected lower production due to divestments and higher exploration write-offs and depreciation, depletion and amortisation.

Output for the quarter averaged 2.2 million barrels of oil equivalent per day, which was 2.2% lower than the third quarter of 2012.

However BP noted that, after adjusting for the effects of divestments and entitlement impacts in its production-sharing agreements, underlying production actually increased 3.4% year-on-year.

It attributed the rise in underlying production largely to new major project volumes in the North Sea and Angola and the absence of seasonal weather-related downtime in the Gulf of Mexico.

BP said it expected fourth quarter production to be relatively flat, with full year production anticipated to be lower than at the end of 2012 due to the recent divestments.

BP chief executive Bob Dudley said he expected capital spending for the year to be in a range between $24 billion and $25 billion, adding he expected it remain around the same level in 2014.

The company also revealed on Tuesday it would increase its quarterly dividend by 5.6%, to 9.5 cents per ordinary share, which will be paid in December.

It added that its board intended to review the level of dividend with the first and third quarter results each year.

“In 2011 we set a clear target for operating cash flow in 2014 and we are confident in its delivery,” Dudley said.

“The strong operational progress we are now seeing across the group, combined with our focus on disciplined investment, also underpins our confidence in growing long-term sustainable free cash flow and being able to increase shareholder distributions. Today’s announcement is a further demonstration of this.”

– Upstream

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