BP Well Placed to Weather the Storm!
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Tuesday, 28 October 2008 |
BP is making good
progress in its drive to improve performance, chief executive Tony
Hayward said today as the company announced underlying profits for the
third quarter of 2008 of $8.9 billion, excluding non-operating items
and fair value accounting effects.
Despite some operational
upsets, including hurricane damage in the Gulf of Mexico and
interruptions to output from its Caspian fields, BP’s oil and gas
production was slightly up on the same period of last year and the
underlying result for the refining and marketing business rose by 70
per cent.
“Although it has since fallen away sharply, the high oil price of the
third quarter obviously helped our absolute result,” Hayward said. “But
this should not obscure very real operational improvements in refining
and rigorous cost control across the company that kept our cash costs
essentially flat compared with last year – despite immense inflationary
pressures in the sector.
“We are making good on our promise to deliver the strategy we laid out
earlier this year – upstream growth, downstream turnaround and
corporate simplification. We are well-placed to weather the prevailing
financial storm and to benefit from the business opportunities that may
well arise from a downturn.”
The highlights of today’s results were:
- Replacement cost profit of $10 billion, up 148 per cent on 3Q
2007, including a gain of $1.1 billion from non-operating items and
fair value accounting effects.
- Operating cash flow of $14.9 billion, a rise of 133 per cent.
- Upstream underlying pre-tax profit of $11.5 billion, including $849 million from TNK-BP – up from $6.3 billion.
- Slightly higher output of 3.664 million barrels of oil equivalent,
but showing an underlying rise of around five per cent after adjusting
for oil price impacts on production-sharing agreements.
- Downstream underlying pre-tax profit of $1.3 billion, up some 70 per cent.
- Gearing of 17 per cent, compared with target range of between 20 and 30 per cent.
Confirming a dividend of 14 cents a share payable in December, Hayward
said this represented a dollar rise of some 30 per cent and a Sterling
rise of over 60 per cent versus a year ago.
“BP is very aware that in the current volatile climate dividends and
the strength of balance sheets are a matter of concern to investors,
including pension funds. In the UK, for instance, we estimate that our
dividend is currently the equivalent of more than 10 per cent of the
dividend income paid to pension funds by FTSE 100 companies.
“Our aim remains unchanged – to grow that dividend through time in line
with our view of future sustainable performance. As new upstream
projects like Thunder Horse come on stream, refinery availability is
restored in the US, and the results of cost initiatives begin to
deliver, the financial benefits of that performance are showing
through. We are steadily and methodically meeting our promises.”
Hayward said that although oil prices could dip further as the world
enters recession, “I believe that BP is well-positioned to cope with
such volatility. Our balance sheet is strong and we have committed less
of our portfolio to high-cost options like tar sands and gas conversion
than some of our peers. As I said, we think the current turmoil may in fact create
opportunities for us and we will look at those very closely.”
Describing the pace of BP’s recovery as one of “steady acceleration”,
Hayward said production growth would be underpinned well into the next
decade by the series of major projects already under way together with
BP’s strong resource base and continuing exploration success. “In
refining and marketing, we are closing the competitive gap against our
peers.”
Hayward said there would be no let-up in the drive for corporate
simplification, continued cost reduction and front-line efficiency in
operations. “BP’s workforce across the world has responded powerfully
to our determination to make every dollar count. Today’s results
reflect those efforts. Our disciplined approach will continue and there
is much more we plan to do.”
PetrolWorld 281008 Source: BP
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