BP attributes lower E&P results to low oil, gas prices

Nov. 6, 2001
BP PLC said its third quarter exploration and production results were down 26% from the same quarter a year ago because of lower prices.

By the OGJ Online Staff

HOUSTON, Nov. 6 -- BP PLC said its third quarter exploration and production results were down 26% from the same quarter a year ago because of lower prices.

The pro forma operating result for that segment, adjusted for special items, was $3 billion, down from $4.1 billion for third quarter 2000.

"Average BP liquids realizations declined by 17% to $23.08/bbl, and natural gas realizations averaged $2.49/Mcf, down 17%. Higher volumes, continued productivity driven cost savings and lower exploration expense provided some offset to this adverse price effect," said the company.

The quarter's oil and gas production increased by around 3% from a year ago, with natural gas up 8% and liquids down slightly. "Crude oil production from the deepwater Gulf of Mexico increased by 25% as new capacity continues to be added. The increase in natural gas resulted from strong output growth in our joint venture in Argentina, up 40%, and in North America, up 6%," said BP.

In the refining and marketing segment, the results reflected higher marketing volumes than the same quarter a year ago. The company said the overall trading environment was similar to third quarter 2000, "with lower refining margins offset by improvements in retail margins."

The quarterly pro forma operating result for the refining and marketing segment, adjusted for special items, was $1.29 billion, up slightly from the third quarter 2000's $1.26 billion.

Overall, BP's pro forma result, adjusted for special items, was $3 billion, down from the comparable quarter's $3.8 billion.

BP Group CEO John Browne said that oil prices are key going forward. "Oil prices have softened as demand has weakened, particularly for aviation fuel, after the tragic events of 11 September, while [the Organization of Petroleum Exporting Countries] has continued to produce beyond its quotas. The critical issue, as we look forward, is whether OPEC will curb that output sufficiently to pull the crude price back within its target range.

"US natural gas prices have settled at more normal levels, though we should expect the usual seasonal variations. Refining margins continue to show big regional differences but, overall, are likely to be down on last year because of lower product demand. Retail margins have benefited recently from falling product prices, but chemicals margins look set to stay pretty flat due to weakening demand and excess capacity."