BP Q2 underlying replacement cost profit soars 34%

29 Jul '14

4 min read

The end of the Abu Dhabi concession in January 2014 together with divestment impacts, however, meant that reported Upstream production, at 2.1 million barrels of oil equivalent a day (mmboed), was 6% lower. Reported production in the third quarter is expected to be lower due primarily to turnaround and seasonal maintenance activities. Including Russia, reported group oil and gas production averaged 3.1 mmboed.

Reported underlying net income from Rosneft for the quarter was $1.0 billion. BP received a dividend payment of approximately $700 million earlier in July.

The Downstream reported underlying pre-tax replacement cost profit of $0.7 billion, compared with $1.0 billion in the previous quarter and $1.2 billion for the second quarter of 2013. Both a significantly weaker refining environment and a weaker contribution from supply and trading negatively impacted the result compared to a year earlier, although this was partially offset by benefits from increasing heavy crude runs at the Whiting refinery. During the quarter, throughput of heavy oil at Whiting reached a high of 270,000 barrels a day.

Five new major upstream projects in BP’s key regions have started production so far in 2014 – most recently, the CLOV project in Angola achieved first oil on 12 June. Three of these five projects are in the deepwater Gulf of Mexico. Two further projects are expected on-stream in 2014.

Greater operating efficiency is being demonstrated in the Upstream, with average plant reliability for the first half higher than a year earlier, drilling performance continuing to improve and seven of the turnarounds planned for 2014 complete or underway. In the Downstream, refining availability was again maintained above 95% for the quarter.

In exploration, BP has participated in 10 completed wells to date in 2014 which have so far resulted in two significant discoveries – Notus in Egypt and Orca in Angola. 15-17 wells are expected to be completed over the whole year.

In the quarter the provision for litigation related to the Gulf of Mexico oil spill was increased by $260 million. The total cumulative pre-tax charge for the incident to date is now $43.0 billion. The provision does not include any amounts for business economic loss claims that are yet to be received, processed and paid.

At the end of the quarter, the aggregate remaining cash balance in the $20 billion Trust and qualified settlement funds remained at $6.3 billion. The unallocated headroom in the Trust remained at around $700 million.

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