BP Q1 profit retreats on weaker output, refining
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BP Plc, Europe's second-biggest oil company, said profit declined 19 percent in the first quarter as asset sales lowered production and refining weakened.
Net income fell to $5.9 billion from $7.3 billion in the first quarter, the London-based company said on Tuesday in a statement. Excluding one-time items and changes in inventories, profit missed analyst estimates. Oil and gas production, including output from the Russian TNK-BP venture, was 3.45 million barrels of oil equivalent a day.
Chief Executive Officer Bob Dudley is trying to convince investors that BP has overcome the 2010 Gulf of Mexico oil spill by selling off assets, gaining access to deepwater and US shale opportunities and raising the dividend for shareholders. The company said on Tuesday that it plans to sell some "non-strategic" assets in the Gulf of Mexico, including stakes in the Marlin, Horn Mountain, Holstein, Ram Powell and Diana Hoover fields.
"These are disappointing numbers," said Stuart Joyner, an analyst at Investec Securities Ltd in London. "They're in between disposals taking earnings down and new growth opportunities coming through."
Adjusted first-quarter earnings fell to $4.8 billion from $5.5 billion a year earlier.
BP's shares are still down more than 30 percent since the spill, which killed 11 workers and caused the worst offshore oil spill in US history.
BP still faces a trial over liability for the disaster with the US Department of Justice after agreeing to pay at least $7.8 billion to victims of the spill in March.
BP said in February that production should be "broadly flat" this year after the Gulf of Mexico spill forced the company to shut down fields for safety reviews and sell assets to raise cash. It is targeting total asset sales of $38 billion by the end of next year after about $23 billion of divestments so far. About 120,000 barrels of oil equivalent capacity a day will be sold this year.
Seasonal maintenance
Production excluding TNK-BP fell 6 percent from a year ago to 2.45 million barrels of oil equivalent a day. The company expects output to decline in the second quarter and for costs to be higher due to seasonal maintenance.
Brent crude averaged $118.45 a barrel in the first quarter, compared with $105.52 a year earlier. BP estimates its earnings rise $300 million a year for every $1 gain in Brent crude.
The company plans to dispose of the Texas City and Carson refineries by the end of this year. Profit in the refining and marketing division slipped to $2.3 billion from $4.4 billion a year earlier. The company said margins should widen in the second quarter.
Global margins have improved since the end of March. BP's refining marker margin stood at $15.04 a barrel in the second quarter to date, compared with $11.60 in the first quarter, according to the company's website. The company's profits gain about $650 million a year for every $1 increase in the margin, according to rules of thumb on BP's website.
BP held talks with the US Department of Justice about a settlement for pollution claims that can reach as much as $17.6 billion. The company is set to complete payments into the $20 billion trust fund for victims this year.
The US brought its first criminal charges in the spill against former BP engineer Kurt Mix on April 25. The government accuses him of destroying evidence about the size of the leak.
Royal Dutch Shell Plc, Europe's largest oil company, last week reported profits that beat expectations as output rose, and it raised its target for asset sales. Exxon Mobil Corp, the world's biggest energy company, said profit fell 11 percent on the biggest drop in production since 2008.
