BP sees profit despite $40bn Gulf spill costs

Marion Dakers

ref="http://www.cityam.com/company/bp">BP revealed the enormous full cost of the Gulf of Mexico spill yesterday, as it posted a 63 per cent drop in profit that still managed to beat forecasts.

The UK-listed oil giant said the disaster in April has cost $39.9bn to date, including a $20bn fund set aside for compensation claims. The company booked a bigger than expected $7.7bn charge in the three months to the end of September to cover ongoing costs linked to the clean-up.

BP posted a replacement cost profit, which excludes changes in oil prices, of $1.85bn for the quarter, down from $4.98bn a year ago. This figure rose to $5.53bn when the cost of the Deepwater Horizon disaster was stripped out, which comfortably overshot analyst forecasts and represented an 18 per cent rise in underlying profit.

Oil production was down four per cent in the quarter, in part due to the deepwater drilling ban in the US in the wake of the spill. During a conference call chief financial officer Byron Grote told analysts the impact of the ban would continue well into 2011. BP has also lost around 100,000 barrels of oil per day from its production figures following the sale of assets worth $14bn to fund the Gulf clean-up. The company said it will reconsider its suspension of dividend payments in February 2011, in a nod to a potential pay-out for long-suffering investors, and that bonus payments in the next quarter will be based solely on safety targets.