From the Wall Street journal Today
BP Posts 22% Drop in Net Profit
By BENOIT FAUCON
February 6, 2007 9:45 a.m.
LONDON -- BP PLC Tuesday posted a 22% drop in net profit for the fourth quarter, hurt by lower output, declining natural-gas prices and smaller refining margins.
The major U.K. oil company said net income for the three months ended Dec. 31 was $2.88 billion, or 14.9 cents a share, compared with $3.69 billion, or 17.7 cents a share, in the fourth quarter of 2005. Total revenue slipped to $62.5 billion from $63.6 billion.
The quarterly results follow an announcement in January by BP's chief executive, Lord John Browne, that he is leaving 17 months ahead of schedule, after transforming the company into a giant profit machine from a near-bankrupt laggard during his 12-year tenure as CEO.
But his departure comes as BP is reeling from a string of U.S. investigations into a deadly Texas City, Texas, refinery blast and heavy corrosion in an Alaska pipeline. A company spokesman denied any link between Lord Brown's early exit and the investigations.
BP's fourth-quarter group result included a net non-operating charge of $152 million, compared with a net non-operating charge of $553 billion in the fourth quarter of 2005.
The 2006 figure included a $177 million net non-operating charge in exploration and production, particularly due to increases in estimated decommissioning costs associated with divested hurricane-damaged fields in the Gulf of Mexico and legal provisions.
The total was also driven by a $188 million net charge in the "other businesses and corporate" segment, primarily related to the reassessment of certain provisions, BP said.
The charges were offset by net non-operating gains in the gas, power and renewable energy businesses. The fourth-quarter 2005 net non-operating charge was largely due to changes in the value of natural-gas contracts and in accounting standards.
"The fourth-quarter result reflects the recent declines in the overall price and margin environment, as well as operational factors and increased safety and integrity investments," Lord Browne said in a statement. "We remain committed to addressing the recent operational issues while executing our strategy with discipline and focus."
BP's output averaged 3.84 million barrels of oil equivalent a day in the quarter, down 5% from 4.02 million barrels in the same period the previous year. The company said divestments and lower entitlements under production-sharing agreements had negatively affected its numbers.
BP reported in October that output from its Prudhoe Bay oil field in Alaska had returned to more than 400,000 barrels a day, after halving in August when BP discovered pipeline corrosion and a small oil spill. But BP has also said that Alaskan production gains were partially offset by weather-related delays.
Last month, BHP Billiton Ltd., BP's 44% partner in the U.S. Gulf of Mexico Atlantis development, said its share in the project's budget rose 50% to $1.5 billion. BP owns and operates 56% of the oil and gas project.
Write to Benoit Faucon at
benoit.faucon@dowjones.com