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BP's earnings fall as it continues to sell assets

Stanley Reed

LONDON - The British oil giant BP reported Tuesday that first-quarter earnings, excluding extraordinary items, fell 23.5 percent from the period a year earlier, as production slipped and it continued to sell assets.

The earnings of $3.2 billion were slightly above analysts' forecasts of $3.1 billion, but significantly lower than the $4.2 billion posted in the first three months of 2013.

Year-on-year comparisons are difficult to make at BP because the company has been downsizing rapidly to pay damages for the 2010 Gulf of Mexico oil spill as well as to finance share buybacks.

BP is a smaller company than it used to be, producing around 3 million barrels of oil equivalent a day, compared with about 4 million barrels a day before the spill.

The company said the sale of oil fields was a big reason for the fall in earnings. Production, excluding what BP books from its nearly 20 percent holding in the Russian oil company Rosneft, was down 8.5 percent from the period a year earlier. BP also took a $500 million write-down on shale rock acreage in the United States and a $845 million write-down on an offshore block in Brazil.

In a note to clients Tuesday, analysts at Liberum Capital, an investment bank based in London, said the results were "solid although the dividend increase was less than we hoped," referring to a 25 cent increase in the quarterly payout, to $9.75 from $9.50.

First-quarter revenue fell to $91.7 billion, from $94.1 billion in the period a year earlier, while net income fell about 79 percent, to $3.5 billion. In the first quarter of 2013, however, BP's reported earnings of $16.8 billion included a $12.5 billion gain from its sale of a Russian affiliate, TNK-BP, to the Russian state oil company Rosneft.

BP emphasized that it would continue the recent focus on asset sales and returning money to investors. BP said it had already agreed to more than $3 billion in such disposals this year, including the recent sale of a handful of small oil fields in Alaska. BP plans $10 billion in sales through 2015.

The company said it had spent $7.6 billion in a continuing $8 billion share buyback program. BP's chief executive, Robert W. Dudley, suggested additional buybacks were in the works. "We expect to use surplus cash to support further distributions," he said.

 


By STANLEY REED
The New York Times