BP profits beat estimates but lawsuits loom

 
Suzie Neuwirth
BRITISH oil giant BP yesterday posted first-quarter profits which beat analysts’ expectations by $1bn (£650m), although the company revealed that it faces an additional 2,200 lawsuits over the 2010 Deepwater Horizon oil spill.

Profits fell to $4.2bn, down from $4.7bn year-on-year, but this was around 29 per cent above consensus estimates for the period.

Last month saw the three-year deadline for claims relating to the 2010 disaster, which claimed 11 lives and discharged around 4.9m barrels of oil into the Gulf of Mexico.

“There are two parts to BP. The legacy of the Gulf of Mexico has taken a turn for the worse with the 2,200 lawsuits announcement, although it was unsurprising that there would be a flurry of activity before the claims deadline and many may be spurious,” Alastair McCaig, analyst at IG Markets, told City A.M.

“However, in terms of production activity, they have done very well and beaten expectations by a comfortable margin.”

The FTSE 100-listed company has been divesting its non-core assets, including its stake in Russian joint venture TNK-BP, in the wake of the disaster. Net debt fell to $17.7bn at the end of the first quarter, largely due to the Russian transaction.

BP managed to mitigate the impact of divestments on production this quarter by increasing output from high-margin areas such as Angola and the North Sea.