Lloyds List: High oil prices lubricate BP's profits despite US hurricanes: 'We anticipate production from the deepwater Gulf of Mexico to be back to normal, with the exception of the Shell-operated Mars platform, by the end of the year,' added Lord Browne.”: Wednesday October 26, 2005
Katrina and Rita fail to dampen results, writes Martyn Wingrove
SURGING oil prices boosted BP's profits up 16% in the third quarter, despite production losses caused by hurricanes.
The British oil major reported profits of $4.41bn in the third quarter, compared with $3.79bn in the same period a year ago, when oil prices were lower.
'The recent hurricanes in the US have impacted our results. However, underlying performance is strong, amplified by high prices of oil, gas and products,' said BP group chief executive Lord Browne.
'In the third quarter, oil prices were strong. For BP, our average realised price for crude oil was $57 per barrel, up 44% a year ago. We expect oil prices to be well supported through the winter.'
BP's average hydrocarbon production was 2% down, to 3.8m barrels of oil equivalent per day during the third quarter, due mostly to the aftermath of hurricanes Katrina and Rita crashing through the Gulf of Mexico.
'We estimate the third quarter pre-tax impact of these storms on BP was $700m, $550m from exploration and production and $150m in refining and marketing,' said Lord Browne.
BP had shut-in production on average at 135,000 bpd in the third quarter with the Marlin tension-leg platform, Pompano and Mars facilities still shut down.
Mr Browne estimates that fourth quarter production will be down 160,000 bpd from these facilities closures and daily output for the whole of 2005 will be around 4m barrels, down around 150,000 bpd due to the hurricanes.
'We anticipate production from the deepwater Gulf of Mexico to be back to normal, with the exception of the Shell-operated Mars platform, by the end of the year,' added Lord Browne.
Output was also impacted by higher planned maintenance on North Sea platforms that reduced production from the UK and Norwegian fields.
Some of this impact was offset by output gains in Angola, with the ExxonMobil-operated Kizomba B project brought on-line, and from Russian joint venture TNK-BP, which contributed $800m to BP's third quarter profits.
One upside for the UK major from the hurricanes is that its 2005 capital expenditure will be lower, at $14bn, because of projects delayed into 2006 due to the lack of drilling rig availability.
But in the fourth quarter, BP expects to begin production from the Cannonball gas field off Trinidad and to start producing liquefied natural gas from the fourth train on the island.
It expects production to begin on the Rhum and Farragon fields in the North Sea.
BP is also working to restart its huge Texas City refinery on the US Gulf Coast, shut by Hurricane Rita, by the end of this year.
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