BP profits plummet after suspension of Liberty project
Oil giant suffers from writedown of US assets and fall in production
PROFITS at BP plummeted in the last quarter after the oil giant was hit by a dip in production and forced to write down the value of its assets.
BP made a loss of $1.4bn between April and June, compared to a profit of $5.4bn in the same period last year. With changes in the oil price taken into account - the 'replacement cost profit' - the company made a profit of $238m.
Most of the losses are down to cuts in the value of the oil giant's US shale gas assets and refineries and the suspension of the controversial $1.5bn Liberty offshore project in Alaska, according to BusinessWeek. These impairment charges amounted to $4.8bn. Oil production fell by 7.4 per cent, partly due to maintenance on facilities in the Gulf of Mexico.
BP chief executive Bob Dudley said: "We recognise this was a weak earnings quarter, driven by a combination of factors affecting both the sector and BP specifically."
He suggested things were unlikely to get much better in the current quarter, adding: "Our extensive turnaround and maintenance program, which will continue into the third quarter, is also affecting some aspects of our near term results."
However, production should increase in the final quarter, and, Dudley said, "full year underlying production, adjusted for divestments, is expected to be broadly similar to 2011".
BP's performance reflects poor results elsewhere in the industry, which has been hit by low oil prices. Shell disappointed last week when it reported profits were down 13 per cent for the second quarter. Exxon also missed analysts' expectations.