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BP Q2 Profit Slumps As Write-downs Weigh

offshore rig

BP reported underlying profit on a replacement cost basis of US$684 million for the second quarter of the year, down from US$1.5 billion for the first quarter. On an annual basis, however, the underlying RC result was only slightly lower than the US$720 million booked for April-June 2016.

Net debt as of June 30, 2017, went up to US$39.8 billion, up from US$30.9 billion a year earlier. Divestments brought in US$500 million in the second quarter, up from US$400 million in Q2 2016.

Operating cash flow for the three-month period came in at US$6.9 billion, up from US$5.3 billion a year earlier, excluding payments related to the 2010 Deepwater Horizon explosion in the Gulf of Mexico. Second-quarter expenses related to the disaster stood at US$2 billion.

A US$753-million write-down, most of it on an offshore project in Angola, weighed on the net result. BP decided the project was not commercially viable and sold its stake in it.

BP said oil and gas production in April-June rose by 10 percent, to a bit over 3.5 million barrels daily, including production by Rosneft, in which BP is a shareholder. Excluding its share in Rosneft’s output, BP’s production in the second quarter averaged about 2.5 million bpd.

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So far in 2017, the company said in a presentation on the second-quarter results, BP has started three large-scale projects and plans to launch another four by the end of the year. Also by the end of the year, BP expects to shrink unit production costs by 40 percent compared with 2013 levels, CEO Bob Dudley said.

Dudley added that BP will continue to focus on cost reduction and spending discipline in the current price environment, expecting further increases in production through the rest of 2017 and in 2018. As for the increase in net debt, the chief executive attributed it to the Deepwater Horizon payments and said the figure should shrink over the second half of the year.

By Irina Slav for Oilprice.com

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