BP boss predicts stability after 53% drop in profits

London – BP has posted second quarter profits of $3,140 million, 53% lower than in the same period last year, but, up 32% from the first quarter of this year. Net revenues from operating activities remained stable at $6.8 billion compared to the same period last year, while daily production rose 4% to more than 4 million barrels of oil equivalent in the three months to end-June.

Chief executive Tony Hayward said BP was delivering good performance in a very tough environment: “We are in turbulent times, volatile and uncertain. But we continue to steer a steady course through choppy waters.

“Two years ago we set out to restore our ability to compete more effectively with our rivals in the sector. Despite the current climate, we are making good progress in growing our upstream, turning around our downstream and driving cost-efficiency across the group.”

Hayward said progress was underpinned by a simplified organisation, improving expertise at the operational level and increasing focus on operational safety and integrity. Cash costs had been reduced by more than $2 billion in the first half of the year, versus the same period last year. Capital expenditure for the second quarter and half year was $4.8 billion and is expected to be less than $20 billion for the year.

“We have already surpassed the target we set ourselves at the beginning of this year for cash costs but we are by no means complacent. We will continue to push efficiencies into the group and make sure every dollar counts. Based on this strong progress, we can expect cash costs for the full year to be down by more than $3 billion compared with 2008,” concluded the CEO.

Hayward said the latest economic data suggested the global economy could stabilise this summer but that any recovery, whenever it comes, would likely be sluggish: “The overall picture is of energy demand now stabilising following significant falls in the first half of the year. We see little evidence of any growth in demand and expect the recovery to be long and drawn out.”

He added that year on year production growth was expected to continue in the second half, though normal seasonal maintenance turnarounds would impact the third quarter. In the downstream area, with Texas City restored to full capability, overall refining availability rose 5.3% versus the same period last year, to 93.6%, its highest level since the first quarter of 2005.