Supermajor BP has posted a replacement cost (RC) first quarter profit of $5.48 billion, down 2.1% on the $5.6 billion recorded for the first quarter 2010, after it was forced to sell assets to pay for the Gulf of Mexico oil spill.
In an announcement, BP said lower production volumes (including from the impact of divestments), higher costs (including rig standby costs in the Gulf of Mexico), higher exploration write-offs and a lower contribution from gas marketing and trading had also negatively affected the year’s results.
BP produced an average of 3578 million barrels of oil equivalent per day, 11% lower than in the first quarter of the previous year, which it said were partially caused by the drilling moratorium in the Gulf of Mexico.
Higher turnaround and maintenance activity in the North Sea and in Angola, and the Trans-Alaska Pipeline System interruption had also dragged production down, though this was partly offset by first production from Iraq, the company said.
The company income statement for the first quarter included a pre-tax charge of $400 million, reflecting an increase in the oil spill response provision and functional expenses of BP's Gulf Coast Restoration Organisation.
In February BP gave $1.25 billion to the Deepwater Horizon Oil Spill Trust fund, administered by the Gulf Coast Claims Facility, of which $1.1 billion was paid out, $934 million of which was paid through the GCCF to individual and business claimants.
In the quarter BP completed most of the subsea repair work needed following the spill, including the plugging and abandonment of the second relief well on 8 March.
The last source control vessel, the Discoverer Enterprise, would be completely cleaned and decontaminated by the second quarter, with a seabed survey having started on 21 March and being expected to take between 40 and 60 days to complete.
The drilling moratorium, acquisitions and divestments and the seasonal ramp-up in turnaround activity, which is expected to be higher than in 2010, would also affect second quarter production, BP said.
RC net income excludes unrealised gains or losses related to changes in the value of oil inventories and is thus comparable to net income under US accounting rules.