BP Records Another Fall in Profit

Oil giant, British Petroleum (BP), recorded the worst profit in 10 years mainly due to Libya Write-off, trading and the need to cover the costs of the Deepwater Horizon tragedy.

According to Bloomberg, BP profit adjusted for one-time items and inventory changes dropped to $1.3 billion in the second quarter, 64 percent lower than a year earlier. BP will provide a further $18.7 billion to five US states affected by the 2010 oil-spill tragedy that killed 11 workers and spewed millions of gallons of crude into the Gulf of Mexico. BP said the settlement would bring its full obligations to $54.6 billion.

Besides, the Deepwater Horizon tragedy, BP recorded a fall in the profits, due to low oil prices and the turbulence in Libya. In the past few weeks oil prices have fallen back in response to continued oversupply and market weakness and the recent agreements regarding Iran. BP CEO Bob Dudley said about the low oil prices: “I am confident that positioning BP for a period of weaker prices is the right course to take, and will serve the company well for the future.”

In regard with Libya, BP reported exploration write-downs and other costs totaling $598 million. This includes a $432 million write-off because there is “significant uncertainty on when drilling operations might be able to proceed.”

“The miss is primarily because of the Libyan charge,” Jason Gammel, a London-based analyst at Jefferies Group LLC, said by phone to Bloomberg. “BP is restructuring costs and that’s working out well for them as oil continues to be lower,” he added.