BP says output fall has bottomed out
London - BP has turned the corner in its recovery from the Gulf of Mexico oil spill, the British oil major said on Tuesday, predicting production growth and an almost 50% increase in planned divestments to $45bn.
Management said it expected improved cash flow would in time enable the group to pay investors higher dividends and restart a prgramme of share buybacks.
However, the company also reported lower underlying third-quarter profits, as a fall in production after it sold fields to pay for the Gulf of Mexico oil spill outweighed the benefits of higher oil prices.
BP said it made a replacement cost net profit of $5.14bn in the quarter, up from $1.85bn in the same period last year when the group took a large charge related to the oil spill.
As well as suffering the impact of a shrunken production base, BP’s oil and gas output has been diminished by an overhaul of its facilities as the company seeks to improve safety.
Platforms are routinely shut to complete repairs or conduct maintenance, but twice as many facilities had been closed in the third quarter as usual, a spokesperson said.
BP said the increased level of maintenance turnarounds had now come to an end.
“October 2011 had marked a turning point in the company’s oil and gas output,” BP said in a statement.
Stripping out such one-offs, the result fell 3.7% to $5.33bn, ahead of an average forecast of $5.03bn given in a Reuters poll of nine analysts.
Replacement cost profit strips out unrealised gains and losses related to changes in the value of fuel inventories, and, as such, is comparable with net income under US accounting rules.