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BP posts strong Q3, will increase investment in upstream
Oct '12
BP announced its financial results for the third quarter of 2012, reporting underlying replacement cost profit, adjusted for non-operating items and fair value accounting effects, of $5.2 billion. It also announced an increase in its quarterly dividend to 9c per share – an increase of 12.5 per cent – expected to be paid in the fourth quarter. 

“BP’s performance and the strong progress we are making in transforming the company give us the confidence to increase distributions to our shareholders,” said group chief executive Bob Dudley. “We are on track with our strategy to 2014 and are laying the right foundations for sustainable growth during the coming decade.” 

BP expects to generate future growth through increased investment in new upstream projects in higher-margin areas and through new access and exploration. BP’s business portfolio is expected to become more tightly focused around its strong existing positions and its key operating strengths. 
Third quarter underlying replacement cost profit was $5.2 billion, compared to $3.7 billion reported for the previous quarter and $5.5 billion for the third quarter of 2011, which was prior to a number of significant divestments. 
The quarter’s results benefited from a strong performance in BP’s downstream business, where good operational delivery capitalised on increased refining margins. In the upstream, performance was similar to the second quarter as increased production from new projects and completion of turnarounds in the Gulf of Mexico was offset by seasonal maintenance in North Sea and Alaska and the impact of Hurricane Isaac in the Gulf. In addition, more stable oil prices in the third quarter resulted in some positive reversal of the unusual price effects seen in the second quarter earnings, such as Russian duty lag. 
Operating cash flow in the quarter was $6.3 billion. 
At the end of the third quarter, gearing was 20.9 per cent compared to 21.9 per cent at the end of the previous quarter. Gearing is expected to reduce as the company works to complete the divestment programme and ends payments into the $20 billion Trust Fund. 
Production of oil and gas, excluding TNK-BP, was 2.26 million barrels of oil equivalent a day (mmboed), broadly similar to the second quarter and 3 per cent lower than a year ago. Production is expected to increase in the fourth quarter as the maintenance season completes and the benefit of new projects continues, but offset partially by the timing of Gulf of Mexico and North Sea divestments expected to complete in the fourth quarter. BP’s share of TNK-BP production in the quarter was 1mmboed, slightly more than in the same period last year. 

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