26th Oct 11
Profit rise for BP marks ‘turning point’
by Natasha Redman
Back in business: BP marks turning pont after Horizon disaster
Back in business: BP marks turning pont after Horizon disaster
BP boss Bob Dudley insisted on Tuesday that the troubled oil giant had arrived at a “definite turning point” after the Gulf of Mexico disaster last year, as he revealed an increase to third-quarter profits.
The group reported a profit of $5.14bn (£3.2bn) over the three months ending September, in comparison with $1.8bn for the same period in 2010 when BP was forced t pay heavy charges for the cleaning up of the Gulf spillage. The company said that oil production during the quarter dropped by 12 per cent to 3.32 million barrels as a result of the production suspension in the Gulf, but BP expects that production will rise in the fourth quarter.
Dudley has been facing pressure since a deal with Russian company Rosneft to explore within the Arctic region collapsed, but on Tuesday revealed a rise in the group’s asset sale programme to $45bn from $30bn. He said he expected cashflow to increase by roughly 50 per cent by 2014 – resulting in greater returns for shareholders.
Dudley, brought in to take the place of Tony Hayward following the crisis, said the additional cash would allow it to double what it spends on new exploration as well as to raise the group’s investment its giant fields, building its gas operations and its deep water operations.
The American chief said that the company’s Gulf of Mexico Trust Fund payments will come to an end next year and will provide 50 per cent of the cashflow increase, while 17 new projects have been scheduled to be launched in the next three years. BP has restarted its Gulf operations and received approval last week for an exploration plan for the region’s Kaskida field.
The cashflow forecast is worked out on the basis that oil prices are $100 per barrel, in comparison with this year’s average of $112. However, higher maintenance costs and activity and lower production offset the benefit of increased prices during the last quarter.
Over the nine months ending 30 September, the group posted profits of $15.9bn. Dudley said that the company has stabilised, turned round and now, with high-margin assets back on stream, has arrived at a clear turning point. He added that the group had had kept to its Gulf commitments and was putting risk management and safety at the core of their business.
Shares increased by three per cent following the update. The oil giant also said it plans to use any additional funds for higher dividends and extra share buybacks, but BP help its most recent quarter three payment at 7 cents in spite of City forecasts of an increase
BP said on Tuesday that future dividend plans will be reviewed in February.
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