BP PLC (BP, BP.LN) said Tuesday its first-quarter profit nearly tripled from a year earlier, as proceeds from the $27.5 billion sale of Russian joint venture TNK-BP offset falling oil and gas production.
BP PLC (BP, BP.LN) said Tuesday its first-quarter profit nearly tripled
from a year earlier, as proceeds from the $27.5 billion sale of Russian joint
venture TNK-BP offset falling oil and gas production.
BP said net profit almost tripled to $16.86 billion from $5.77 billion. But
that figure includes $12.5 billion of profit from the sale of TNK-BP to OAO
Rosneft (ROSN.RS), which closed in March. Excluding the TNK sale and other
extraordinary items, BP's profit was $4.22 billion for the quarter ended March
31.
That's down 9.4% from a year earlier, but well above the average of $3.25
billion projected by nine analysts polled by Dow Jones Newswires. Even though
overall oil and gas production declined, thanks to asset sales, the company
benefited from new higher-margin oil projects.
The results "demonstrate the progress BP is making" in a plan to
improve profit in the wake of the 2010 Gulf of Mexico oil spill, BP Chief
Executive Bob Dudley said in a statement.
They also show the company's ongoing challenges. BP said it expects production
to drop in the current quarter from the prior one due to maintenance-related
shutdowns in the
Gulf of Mexico
and
North
Sea
and projected cost increases. Much of the unexpected first-quarter
profit boost came from one-time gains.
"The first quarter is one where a number of the more variable factors all
went in BP's favor," said RBC Capital Markets analyst Peter Hutton.
Factoring out gains from its gas-trading business, BP made about $15 in profit
per barrel of oil or natural-gas equivalent it produced in the first quarter,
said Iain Pyle, an analyst with Bernstein Research. That falls far short of
Chevron Corp.'s (CVX) $28 per barrel and Exxon Mobil Corp.'s (XOM) $21 per
barrel, Mr. Pyle said.
BP also did not provide guidance on whether or when it may settle ongoing
litigation over the 2010 Gulf spill, an area of uncertainty that continues to
weigh on the stock, Mr. Pyle said.
BP on March 21 concluded its sale of TNK-BP to OAO Rosneft for a total of $27.5
billion in cash and Rosneft shares. BP now holds a 19.75% interest in Rosneft.
The gain on the sale was $15.5 billion, of which $12.5 billion was recognized in
the first quarter. The rest of the proceeds will be recorded over time, BP
said. The 11 days of earnings from Rosneft attributable to BP in the first
quarter were estimated at $85 million.
Excluding TNK and Rosneft results, BP's total oil and gas production last
quarter was 2.33 million barrels of oil equivalent per day, a 5% decrease from
a year earlier due mostly to other asset sales, and slightly above analyst
expectations of 2.322 million barrels.
The company announced a quarterly dividend of 9 cents a share to be paid in
June. Group revenues were $107.21 billion, compared with $97.42 billion in the
first quarter of 2012. Diluted earnings per share were 87.61 cents, compared
with 29.97 cents the previous year.
BP said that including the TNK deal, its replacement cost profit, a figure that
excludes gains or losses in the value of inventories and is therefore
equivalent to the net profit figure reported by
U.S.
oil
companies, was $16.6 billion in the three months ended March 31, compared with
$4.78 billion in the first quarter of 2012.
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