Falling oil price knocks BP

London - British energy major BP said Tuesday that second-quarter net profit slumped 53% to $4.39bn due to falling oil prices and despite higher output.

Stripping out oil inventories held, net profit was also down 53 percent to $3.14bn in the three months to the end of June, BP said in a results statement.

That compared with $6.75bn in the same period of 2008 when oil had struck record highs above $147/barrel. Prices have since tumbled in the global slowdown but in recent weeks have come of their lows to trade close to $69.

Daily production climbed four percent to 4.005 million barrels of oil and gas in the second quarter, due largely to the start up of the 300,000-barrel-per-day Thunder Horse field in the Gulf of Mexico.

Group revenues fell to $56.56bn in the second quarter from $110.98bn.

BP said it has already achieved its goal of cutting costs by $2.0bn in 2009 - and expected to slash another $1.0bnbefore the end of the year.

Chief executive Tony Hayward said the group was delivering in very tough conditions.

"We are in turbulent times, volatile and uncertain. But we continue to steer a steady course through choppy waters," Hayward said.

"Despite the current climate, we are making good progress in growing our upstream (operations), turning around our downstream and driving cost-efficiency across the group."

Capital spending in the three months to June was $4.8bn and $9.4bn for the six month period, and should be less than $20bn for the full year, according to BP.

Hayward said a recovery in global energy demand would be sluggish.

"The overall picture is of energy demand now stabilising following significant falls in the first half of the year," Hayward said.

"We see little evidence of any growth in demand and expect the recovery to be long and drawn out."

"BP may not be able to control the price of oil but their measures to streamline the business and reduce costs shows the board is in tune with the ebbs and flows of the market," said trader Manoj Ladwa at ETX Capital.

"Looking forward, the price of the stock is likely to be limited on the upside as demand for crude oil remains unpredictable."

At BP, where Hayward has been in charge since 2007, more than 5 000 jobs are being slashed in a bid to reduce costs.

The group's Anglo-Dutch rival Royal Dutch Shell publishes its second quarter results on Thursday.

- AFP