BP PLC, the British multinational oil and gas company headquartered in London reported a bigger-than-expected 13 percent drop in underlying quarterly profit, as its commitment to sell off billions of pounds of assets in the wake of the Gulf of Mexico disaster hit production.
While BP’s financial health is now sufficiently robust to withstand the multibillion-dollar costs stemming from the 2010 explosion and oil spill, production has yet to return to previous levels.
Net income dropped to $5.9 billion from $7.3 billion in the first quarter of 2011, the London-based company said today in a statement.
Europe’s second-largest oil group by market value said its replacement cost (RC) net profit reached $4.93 billion in the quarter, compared with $5.61 billion in the same period last year.
The big difference came in the downstream category, where underlying replacement cost profit fell 58 percent to $924 million compared to $2.2 billion a year earlier.
The company said it was on track with its plan to start six exploration projects in 2012, including in Angola and in the Gulf of Mexico in the second quarter.
Two years after the oil spill in the Gulf of Mexico, BP’s overall costs related to the incident are still unclear. BP said Tuesday that it paid a total of $16.6 billion into a trust fund. A federal judge is expected Wednesday to consider granting preliminary approval of the $7.8 billion civil settlement between BP and a committee of plaintiffs.
The National Oceanic and Atmospheric Administration ultimately concluded that about 59,200 barrels of oil a day flowed from the well before it was capped, making it the worst oil spill in US history.
Shares in BP fell nearly 3% after today’s update.