BP Profits down 35% to $238m in second quarter image

British oil giant BP said its underlying profit was £2.35bn, down from £3.62bn in 2011. The company’s profit in the first quarter of 2012 was £3.05bn.

The 35% drop in profit can be blamed to reducing oil prices and a cut in output due to an extensive maintenance programme. Europe’s second-biggest oil company also reported drop in production by 8% to 2.3m barrels of oil equivalent a day.

BP said the results were impacted by weaker oil and US gas prices together with reductions in output due to planned maintenance, particularly affecting high-margin production from the Gulf of Mexico, and lower net income from TNK-BP.

‘We recognise this was a weak earnings quarter, driven by a combination of factors affecting both the sector and BP specifically. The effects of price movements have impacted our earnings in the quarter. Our extensive turnaround and maintenance programme, which will continue into the third quarter, is also affecting some aspects of our near term results. Bob Dudley, group chief executive said.

BP shares have dropped more than 6 percent this year even after a settlement with victims of the April 2010 Macondo oil spill in March for about $7.8 billion.

The company still faces a trial over fines and liabilities with the U.S. Department of Justice.

This means that BP joins the list of European majors that includes Repsol, Royal Dutch Shell and Total that have all reported lower earnings for 2Q 2012.

In exploration, during 2Q 2012 BP acquired 43 leases in the Gulf of Mexico, which are awaiting regulatory approvals.

The firm also resumed operation of its long-term exploration contracts onshore and offshore in Libya, while seismic activities are now underway in Angola and Namibia with several exploration wells currently drilling.