BP reports drop in second quarter income

BP reported that its income for the second quarter was $2.7 billion after adjustments for inventory changes and one-off items, a 25 percent decline compared to the previous year and substantially below analysts’ consensus. The company said lower oil prices, declining earnings in Russia and higher tax rates all had a negative impact on its results. There were also signs that the company’s operations are continuing to suffer from the Gulf of Mexico disaster in 2010 that left 11 people dead and spilled millions of barrels of oil. BP’s output in the United States, a crucial region for the company, dropped 4.4 percent compared to the previous year, reflecting asset sales and a post-spill moratorium on drilling. BP said that overall production in the third quarter was expected to be lower because of maintenance and disposals.

“The results show strong underlying pretax performance,” the BP chief executive, Bob Dudley, said in a statement. Peter Hutton, an analyst at RBC Capital Markets in London said that given the lower production and maintenance outages, “signals of operating momentum remain difficult to show.” There were some promising signs that the company is returning to normal. BP said that as of July 26 it had bought back $2.4 billion worth of shares in what is expected to be an $8 billion program and announced that it would pay a dividend of 9 cents per share for the quarter, up from 8 cents the previous year though unchanged from the first quarter.

The company continues to wrestle with uncertainty over the spill in the Gulf of Mexico. The first phase of a civil trial in New Orleans to determine the liabilities of BP and other companies finished in April and is scheduled to resume on Sept. 30. Billions of dollars in damages for BP will be at stake in the court’s ruling. BP said it had added $200 million to its write-offs for the spill, bringing the total at the end of the quarter to $42.4 billion. The company said its overall production, excluding Russia, averaged 2.2 million barrels per day, a 1.5 percent decline from a year earlier that mainly reflected disposals. The company said that production not including sales increased 4.4 percent from the previous year as major projects in Norway and Angola ramped up. Since 2010, the company has sold about $38 billion worth of assets outside Russia — mostly oil and gas fields that it deemed nonessential. It completed its sale earlier this year of its 50 percent stake in its Russian affiliate TNK-BP to Rosneft for $12 billion in cash and shares in the company.

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