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BP reports profit fall on declining production

LONDON 07 24 07

British oil giant BP announced a fall in net profit in the three months to June following 24 months of continuously falling production despite strong world demand for energy.

Net profit on the basis of replacement costs, which excludes the effect of changes in the value of oil and gas inventories, fell by 0.5 percent to 6.087 billion dollars (4.406 billion euros) during the second quarter, compared with the same period in 2006.

The replacement cost figure is closely watched by the market.

BP, the world's third-biggest energy group, was also hit by a slight fall in average oil prices during the second quarter compared with prices 12 months earlier.

The results were seen as posing a big challenge to the new head of the group, Tony Hayward, who took over in May after the dramatic resignation of chief executive John Browne

BP said that replacement cost net profit, excluding one-off gains, dropped by 12.5 percent to 5.346 billion dollars during the second quarter.

This was in-line with analysts' forecast range of 4.764-5.634 billion dollars and slightly ahead of the consensus figure of 5.051 billion.

BP is hoping that Hayward, whose previous role was head of exploration and production, will herald a brighter future for Europe's second-biggest energy company behind Royal Dutch Shell.

Its competitor publishes second-quarter earnings on Thursday.

BP said on Tuesday that during the second quarter, oil production fell by 5.3 percent to 3.804 million barrels per day, as the group faced disruptions at US refineries.

Widely-respected business heavyweight John Browne, who transformed BP into a corporate giant, quit as chief executive in May after revelations that he lied to a

High Court judge over how he had met his gay partner of four years.
He had been due to step down in July but quit early because of his personal scandal.

AFP 24 0938 GMT 07 07

Copyright© 2007 AFP. All Rights Reserved.




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