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BP makes loss of $1.4bn as oil and gas prices fall

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31/07/2012
Oil major BP today revealed it had made a loss of more than $1bn in Q2, as a combination of falling oil and gas prices, and a further provision for the Gulf of Mexico disaster, impacted the group.

The group said it had made a loss of $1.385bn in Q2, compared to a profit of $5.7bn this time last year.

Its preferred measure of replacement cost profit was also sharply lower, coming in at just $238m, down from $5.4bn last year.

Adjusted underlying replacement cost profit – which stripped out factors including the cost of the Gulf of Mexico oil spill – came in at $3.7 billion, compared with $5.7 billion for Q2 2011.

It was also lower than Q1 of this year’s figure of $4.8 billion.

BP said results were depressed by weaker oil and US gas prices together with reductions in output due to extensive planned maintenance, particularly affecting high-margin production from the Gulf of Mexico, and lower net income from TNK-BP.

BP – which last week was ordered to pay $3.1bn in damages to Rosneft by a Russian court – said its share of net income from TNK-BP was $700 million lower than the first quarter, driven by the impact of the rapid fall in oil prices amplified by the lag in Russian oil export duty, which is based on earlier higher oil prices.

Bob Dudley, BP group chief executive, said: “We recognise this was a weak earnings quarter, driven by a combination of factors affecting both the sector and BP specifically.

“The effects of price movements have impacted our earnings in the quarter. Our extensive turnaround and maintenance programme, which will continue into the third quarter, is also affecting some aspects of our near term results. All of this will take time, but it is important investment that will enhance safety and reliability for the long term. As we deliver this major transformation, we are also committed to generating sustainable efficiencies in our operations.”

BP’s shares have recovered from the lows seen after the Deepwater Horizon disaster, but provisions for lawsuits continue to impact the group.

It said today that a pre-tax charge of $847 million was taken in Q2, to reflect an increase in provision for various costs and litigation relating the Gulf of Mexico oil spill.

It said today it has so far shelled out $8.8bn to cover the cost of damages caused by the spill.

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