Oil producer BP reported a bigger-than-expected 13 per cent drop in underlying quarterly profit, as production fell after the group was forced to sell fields to pay for the Gulf of Mexico disaster, offsetting an increase in crude prices.
BP said output would continue to decline in the second quarter as it unveiled plans to sell a number of mature fields in the Gulf.
A spokesman denied the company was making a more general pullback from the region, saying the disposals reflected a new strategy of churning assets more quickly and focusing on larger, younger projects.
The London-based group also said it would have to spend more than earlier expected to clean up America's worst-ever offshore oil spill, although this was offset by a drop in the expected cost of paying out claims after the company agreed a settlement with impacted individuals and businesses.
"There is little in the numbers for the bulls," analysts at Nomura said in a note to clients. Investors have been frustrated at how BP's shares have struggled to recover from the spill and the stock last week touched its lowest since November.
Europe's second-largest oil group by market value said its replacement cost (RC) net profit reached $4.93 billion (€3.72) in the quarter, compared with $5.61 billion in the same period last year.
Stripping out one-off items such as the profit on asset sales, the result was down 13 per cent to $4.80 billion, below an average forecast of $5.10 billion from a Reuters poll.
BP said oil and gas production, excluding its Russian joint venture, TNK-BP, was down 6 per cent at 2.45 million barrels of oil equivalent per day.
The company said tough conditions in the refining business led to a drop in profits at its downstream unit.
Chief Executive Bob Dudley, who took over in the wake of the Gulf spill, has pursued a strategy that analysts have described as "shrink to grow", selling old fields more quickly than the group did in the past and focusing investment on new projects.
However, not all analysts are convinced BP will be able to generate new leads quickly enough to replace the assets being sold. Investors are also worried about the continuing legal uncertainty facing the group because of the spill.
The Department of Justice is investigating possible criminal and civil charges against BP that could lead to fines of more than $20 billion, alhtough BP says it expects fines of only around $3.5 billion.
Royal Dutch Shell last week reported a 16 per cent rise in underlying profits, while US rival ConocoPhillips reported a 1 per cent drop and industry leader Exxon Mobil reported an 11 per cent drop.
Reuters
