BP profits up but cost of spill rises to $40 billion

BP OFFERED investors tentative signs of recovery yesterday, with a modest rise in underlying profits, as it increased its estimate of the likely cost of its Gulf of Mexico oil spill to $40 billion (€28.5 billion).

Stripping out one-off costs, including an additional $7.7 billion charge related to capping the blown-out well, BP said underlying results rose 18 per cent, compared to the same period in 2009, to $5.53 billion (€3.94 billion).

The outperformance was due to a big drop in the effective tax rate and strong performance from BP’s refining unit.

The results, upbeat comments about lifting investments next year and comments suggesting the oil giant could reinstate its dividend in 2011, lifted its shares 1.2 per cent to 430 pence. However, some said the result was not necessarily a harbinger of better things as the tax rate would likely revert towards normal levels. BP said it would be hard to repeat the strong profits from the refining unit.

Chief executive Bob Dudley signalled it could be some time before BP returns to strong growth in the Gulf of Mexico, saying it would hold back from submitting applications to drill new wells until well into 2011 at the earliest. – (Reuters)