London Evening Standard: BP earns £24m every day: “While drivers face rising prices at the pumps, the world's big five oil firms combined - BP, Exxon-Mobil, Royal Dutch/ Shell, ChevronTexaco, and Conoco-Phillips - should see profits of almost £11bn in the last three months.” (ShellNews.net)
This Is Money
26 October 2004,
IL giant BP today posted record profits of $3.94bn (£2.14bn) after fuel prices hit new highs. The third quarter performance, which amounts to £24m a day, came as oil prices rose to an average of almost $50 a barrel.
While drivers face rising prices at the pumps, the world's big five oil firms combined - BP, Exxon-Mobil, Royal Dutch/ Shell, ChevronTexaco, and Conoco-Phillips - should see profits of almost £11bn in the last three months.
BP said the loss of production in the United States following Hurricane Ivan, low inventories and limited spare capacity had underpinned the rising price of crude.
Excluding net* exceptional and non-operating items, BP notched up a result of $4.34bn. This compares with a poll of 13 analysts conducted by Reuters which gave an average forecast of $4.18bn.
The world's second-largest oil producer said profits had been buoyed by higher oil and gas output and prices, and strong refining and chemicals margins.
The firm had already flagged strong production levels in its quarterly trading statement released earlier in the month, with volumes rising 11% on the year. However, a drop in higher margin non-Russian production, partly due to damage from Hurricane Ivan in the Gulf of Mexico, did weigh on profits.
Chief executive Lord Browne expects oil prices to stay above $30 a barrel for the foreseeable future - comfortably above Opec*'s target range of $22-$28 a barrel.
'Oil prices are considered to have an approximate support level* of $30 a barrel for at least the medium term, with chances of spiking above this level,' he said.
All the same, BP is retaining the conservative $20-a-barrel price estimate it uses for planning purposes, giving it a healthy cushion against adverse price movements.
But that looks unlikely, boding well for future earnings. Investec analyst Bruce Evers described Browne's comments about BP's trading outlook as the 'strongest' for a long time.
In addition, while the upstream division powers ahead, the refining business is also performing robustly. Browne said refining margins began the fourth quarter 'strongly' amid concerns over winter heating oil supplies in Europe and lost refinery production due to Hurricane Ivan.
Other positives included plans to fund a 'significant level' of share buybacks and an increase in the quarterly dividend* to 7.10 cents a share from 6.50 cents a year ago.
Meanwhile, disposal plans for a chunk of the group's petrochemicals assets remain 'on track'. The group took one-off charges in the third quarter of $401m - mainly environmental provisions and the write-off of a platform offshore Egypt - up from a net charge of $217m a year earlier.
High oil prices continue to feed through into higher petrol and diesel prices - now at similar levels to those seen during the fuel protests of 2000 - putting the squeeze on British motorists.
Particularly at threat from escalating fuel costs, says the Road Haulage Association (RHA), is Britain's lorry-driving industry, which is seeing business poached by European drivers who are able to stock up on cheaper fuel before crossing the Channel.
'What we would like to see - rather than hearing about large profits - is pump prices being lowered,' said an RHA spokesperson. The RHA continues to call on the Government to freeze petrol duty, which accounts for about three quarters of pump prices.