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BP sees huge Q3 profits, announces 'turning point'

The oil giant’s chief executive has said Q3 results mark a turnaround from the disastrous Gulf of Mexico oil spill.

BP Chief Executive Bob Dudley
BP Chief Executive Bob Dudley
Image: Andrew Milligan/PA Wire/Press Association Images

OIL GIANT BP reported massive third-quarter profits today, with the company’s chief executive saying the results marked a turnaround from the disastrous Gulf of Mexico oil spill.

BP also announced that it now aims to dispose of $45 billion (€32 billion) in assets, up from the $30 billion (€21 billion) it originally set to raise money to pay for damage from the blowout on the Deepwater Horizon drilling rig on April 20 last year. Eleven rig workers were killed in the explosion and fire.

For the three months ending September 30, BP had a net profit of $4.9 billion (€3.5 billion), compared with $1.8 billion (€1.3 billion) a year earlier.

Revenue rose 31 percent to $97.6 billion (€70.2 billion). Brent crude averaged $112 (€80.6) a barrel in the third quarter, up from $77 per barrel a year earlier.

Investors welcomed figure

Investors welcomed the figure and bid BP shares up 2.2 per cent to 447.9 pence in early trading on the London Stock Exchange on Tuesday.

“We have now reached a definite turning point,” Chief Executive Bob Dudley said in a statement accompanying the earnings report.

“Our operations are regaining momentum and we are facing the future with great confidence.”

Tony Shepard, analyst at Charles Stanley & Company, said BP “may have turned the corner.”

“The key event will be the Department of Justice ruling on the criminal and civil investigation which is unlikely before 2012,” Shepard said. “This outcome will determine the issue of negligence and the level of potential fines for BP.”

Replacement cost profit, a measure watched by analysts, was $5.1 billion (€3.6 billion) compared with $1.9 billion (€1.3 billion) a year earlier. On an underlying basis, excluding non-operating items and accounting effects, replacement cost profitwas down 4 per cent to $5.3 billion (€3.8 billion) because production was down 12 per cent and maintenance costs rose.

BP facing more than 600 lawsuits

For the first nine months of the year, BP reported a replacement cost profit of $15.9 billion (€11.4 billion) , compared with a loss of $9.5 billion (€6.8 billion) a year ago when the company absorbed $40 billion in charges because of the Gulf of Mexico spill.

BP said it is facing more than 600 lawsuits from the incident, and expects the total to rise. The company’s potential liabilities “cannot be fully estimated at this time,” BP said.

BP recently settled claims and counterclaims with its partners in the well, Anadarko Petroleum Co. and MOEX Offshore 2007 LLC, a subsidiary of Mitsui.

Still to be resolved are suits involving Transocean Ltd., operator of the Deepwater Horizon drilling rig, and Halliburton Company, which was responsible for cementing the well. The suits are scheduled to go to trial in New Orleans in February.

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