BP reports second-quarter profit despite Macondo charges, Angola writedown

BP PLC reported a second-quarter replacement cost profit of $550 million compared with a loss of $2.25 billion for second-quarter 2016. Its first-half profit was $1.97 billion compared with a loss of $2.73 billion in first-half 2016.

BP PLC reported a second-quarter replacement cost profit of $550 million compared with a loss of $2.25 billion for second-quarter 2016. Its first-half profit was $1.97 billion compared with a loss of $2.73 billion in first-half 2016.

"We continue to position BP for the new oil price environment, with a continued tight focus on costs, efficiency, and discipline in capital spending," commented Bob Dudley, BP chief executive officer.

BP’s second-quarter upstream replacement cost profit before interest and tax was $795 million compared with a loss of $109 million in second-quarter 2016. The result was negatively affected by the firm’s noncash exploration write-off in Angola of about $750 million (OGJ Online, June 30, 2017).

Second-quarter production, meanwhile, jumped about 10% year-over-year to 2.43 million boe/d. BP expects its third-quarter reported production to be broadly flat with the second quarter given the continued ramp-up of major projects offset by seasonal turnaround and maintenance activities.

The firm’s downstream business posted a second-quarter replacement cost profit of $1.57 billion compared with $1.41 billion a year earlier. In the third quarter, BP expects a similar level of industry refining margins and that North American heavy crude oil differentials will remain under pressure.

BP’s Macondo oil spill payments were $2 billion in the second quarter and $4.3 billion in the first half. The firm expects its payments to be considerably lower in the second half. Its full-year estimate is unchanged at $4.5-5.5 billion.

The cumulative pretax income statement charge since the incident in April 2010 amounts to $63.21 billion.

Excluding post-tax amounts related to the Macondo oil spill, the firm’s operating cash flow for the second quarter and half year was $6.9 billion and $11.3 billion, respectively, compared with $5.3 billion and $8.3 billion, respectively, for the same periods in 2016.

Including amounts relating to the Macondo oil spill, BP’s operating cash flow for the second quarter and half year was $4.9 billion and $7 billion, respectively, compared with $3.9 billion and $5.8 billion, respectively, for the same periods in 2016.

BP’s net debt as of June 30 was $39.8 billion compared with $30.9 billion a year earlier.

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