BP profits soar to record US$10bn

The British oil major BP reported a record US$10 billion (Dh36.7bn) in third-quarter replacement cost profits, thanks to higher oil prices.

LONDON // The British oil major BP beat all forecasts and reported a 148 per cent rise in third-quarter replacement cost profits, compared with the same period in 2007, to a record US$10 billion (Dh36.7bn), thanks to higher oil prices. Europe's second-largest oil company by market value said the results showed a turnaround under the chief executive Tony Hayward was paying dividends, but analysts cautioned the recent collapse of crude from above $147 per barrel to about $64 meant the outlook for BP and rivals was more challenging.

Dealers said BP's shares were likely to open five per cent higher on the results. The London-based company said oil and gas production rose slightly in the quarter, compared with the third quarter of 2007, to 3.664 million barrels of oil equivalent per day, while analysts had expected a small drop. A spokesman said the production result was due to a good performance at its Thunder Horse platform in the Gulf of Mexico. "The well performance is amazing there."

BP's previously troubled refining unit reported a big jump in profits to $1.97bn from $371 million in the same period last year. Analysts say BP has made good progress on restructuring its crude processing division, which has been a key area of underperformance relative to rivals in recent years. "In refining and marketing they have a restructuring plan under way and that looks as if it has helped the results there," said Tony Shepard, an oil analyst at the brokerage Charles Stanley.

The replacement cost result, which strips out unrealised gains or losses related to changes in the value of fuel inventories, included a net gain of $1.147bn related to non-operating items. BP said its quarterly dividend would be 14 cents per share, up from 10.825 cents a year earlier. * Reuters