LONDON (Reuters) – BP Plc delivered the worst of a poor set of quarterly results among top oil companies on Tuesday, slashing $5 billion (3.18 billion pounds) off the value of US assets and undershooting expectations with its operating result.
BP posted a decline of 96% in adjusted profit for the second quarter as it wrote down the value of some $5 billion worth of assets.
Proceeds will go to cover costs related to cleanup of massive Gulf of Mexico oil spill in April 2010.
Analyst Richard Griffiths of Oriel Securities said the figures were “testing the faith” of investors and on a divisional basis “missed at every level”.
The $5 billion charge included $2.7 billion for the declining value of US refineries and $2.1 billion for US shale gas assets which are suffering a slump in prices, and for the suspension of its Liberty project in Alaska.
The Gulf of Mexico oil spill continues to plague BP more than two years after the disaster as the energy giant has revealed another 847 million US dollar (£538 million) hit to cover rising legal costs.
Investors are hoping for a deal with US authorities before the US elections, but BP warned there was still “significant uncertainty” with regard to its potential obligations there.
Adjusted for the charge and other one offs, profits on a replacement cost basis were $3.7 billion, down from $5.7 billion a year ago and below expectations of around $4.4 billion.
Analysts said an unexpectedly large loss of output as a result of maintenance in the US Gulf – a problem which also hit rival Royal Dutch/Shell in the quarter – was partly to blame for the MissThey had also underestimated the impact of a tax lag on Russian production, which affected the profits of BP’s Russian joint venture, TNK BP.
The company said it still sees a “significant uncertainty” over US oil spill obligations but that it was in “advanced talks” and on track to sell Texas City and Carson, the two US refineries it has earmarked for disposal, by the end of 2012.
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