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Financial Times: BP bolstered by record oil prices: “Results from BP will be followed later in the week by Shell, ExxonMobil, ConocoPhilips and ChevronTexaco.” (


By Gordon Smith in London

Published: October 26 2004


BP kicked off what is expected to be a near-record week for oil company earnings on Tuesday by announcing a jump in third quarter profits.


During the twelve-week period crude prices hit record highs as a devastating hurricane season upset supply while demand from China and the rest of Asia remained strong.


The average price of crude oil during the quarter was $41.54 a barrel compared with $35.32 in the second quarter and $28.38 a year ago.


Third quarter pro forma profits after exceptionals rose 42.7 per cent to £3.94bn from £2.76bn a year ago and £3.91bn for the previous quarter. Excluding one-off charges, the figure was $4.34bn, in the middle of range of consensus forecasts between $4.1bn and £4.54bn.


Earlier this month BP said storms in the Gulf of Mexico and planned maintenance work at platforms in the North Sea and Alaska led to a decline in average quarterly production but that its Russian acquisition TNK-BP had helped offset production losses elsewhere.


Commenting on this quarter’s performance, Lord Browne, chief executive, said: “This has been another strong performance against a backdrop of strong global demand.


The world economy’s expansion has continued, despite patches of softer growth in the US and Europe.”


He added that the US looked to be recovering although European economies remained below average and that growth in China and other parts of Asia had moderated.


He said the outlook for the rest of this year depended on the rate of US production recovery after Hurricane Ivan and the strength of oil demand growth.


BP said net charges of $401m would result from the quarter due to the write-off of an Egyptian platform, storm damage and “remedial environmental” measures.


The group said margins slipped during the quarter but remained high compared with historical standards but that capital expenditure would be slightly above $14bn for the year. BP added that it expected capital spending next year to be above the previously forecast total of $14bn due to the weak US dollar and inflationary pressures in the capital goods market.


It said net debt stood at $18.6bn at quarter end and the debt equity ratio was 22 per cent, below the previous quarter and below the annual forecast of 25 per cent to 35 per cent.


The quarterly dividend rose to 7.1 cents from 6.5 cents a year ago.


Results from BP will be followed later in the week by Shell, ExxonMobil, ConocoPhilips and ChevronTexaco.


The five companies reporting this week generated $19.6bn in second quarter net income and analysts expect them to fall just short of this total for the third quarter.


BP shares, which have risen 19 per cent this year, slipped 0.2 per cent lower to 536.5p.

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