BP profits slide on lower oil output

BP net profits sank 18 percent in the first quarter on lower oil output triggered by the sale of assets to meet costs of the Gulf of Mexico spill disaster, the British energy giant said on Tuesday. Earnings after tax fell to $5.92 billion (4.46 billion euros) in the first three months of 2012 from $7.25 billion in the first quarter of 2011, BP said in a results statement. Adjusted earnings, which strip out movements in the value of inventories and other items, slid 12.8 percent to $4.8 billion. That fell short of analyst forecasts for $5.10 billion, according to Dow Jones Newswires. BP shares lost 0.83 percent to close at 441.30 pence on London's FTSE 100 index of leading companies, which won 1.30 percent to 5,812.23 points. "BP has failed to take advantage of the higher oil price," commented equity analyst Keith Bowman at Hargreaves Lansdown Stockbrokers. "For BP, the Gulf of Mexico accident continues to overhang, with asset sales impacting production." The performance contrasts with that of major rival Royal Dutch Shell, which reported last week a first quarter adjusted net profit up 16 percent to $7.28 billion, boosted by strong oil prices and rising output. BP on Tuesday said its total production declined three percent to 3.47 million barrels of oil equivalent per day. That compared with 3.58 million in first quarter 2011 and undershot expectations of a drop to 3.46 million. Revenues rose 9.0 percent to $96.70 billion, helped by higher oil prices. BP has now sold $23 billion of assets as part of its ongoing $37.2-billion divestment programme as it seeks to meet the bill for the Gulf of Mexico disaster. During the first quarter, BP sold businesses in Canada, the United States and the North Sea. "We have made a good start against our strategic priorities for 2012," BP chief executive Bob Dudley said in the earnings release. The American boss added that BP had gained "significant new deepwater and US shale exploration acreage" in the first quarter, while five deepwater rigs were at work in the Gulf of Mexico. "This operational progress will underpin the financial momentum we expect to come through as we move into 2013 and 2014," Dudley noted. The company's fortunes were ravaged two years ago by an explosion on the BP-leased Deepwater Horizon rig that killed 11 workers, sent millions of barrels of oil spewing into the sea and left it with huge compensation costs. The blast on April 20, 2010, sparked what was been widely acknowledged to be the worst environmental catastrophe in US history. However, the troubled energy major returned to profit last year with net earnings of $23.9 billion. "Although today's results are a little disappointing (for BP), the recent newsflow from the Gulf of Mexico -- the key driver of the shares -- has been positive," said Jonathan Jackson, head of equities at Killik & Co.