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Daily Telegraph: Browne predicts wave of mergers in oil industry

Lord Browne
(BP chief executive, Lord Browne: ‘There are an awful lot of players and I guess the sector will change shape’)

By Russell Hotten, Industry Editor
25 October 2006

Lord Browne, the chief executive of BP, predicted a wave of consolidation in the oil and gas industry as falling prices led companies to re-assess the finances of their exploration and development activities.
 
Speaking as he unveiled a small rise in the company’s third-quarter net profits, Lord Browne said oil prices would continue downward. “A lot of supply is coming on to the market. We are not suggesting a crash, but more of a moderation.”

Crude oil has been trading recently at around $60 a barrel, down from a peak of $78.40 in July.

Lord Browne said: “The high oil prices meant a lot of activity [from exploration and production companies]. A fall in prices will raises questions about investments. There are an awful lot of players and I guess the sector will change shape.” But he added: “We continue to take the view that oil prices will exceed an average of $40 per barrel over the medium term.” He would not be drawn on BP’s role in any consolidation and appeared dismissive of suggestions that the company might one day merge with Royal Dutch Shell.

The third-quarter profits, including exceptional contributions, jumped 58pc at $6.98bn (£3.7bn). This brought profits for the nine months to $18.35bn, against $14.8bn — a 24pc rise. But excluding exceptional items, these latest Q3 net profits were $4.55bn against $4.4bn last time.

The company has faced a series of problems at its Prudhoe Bay oil field in Alaska and delays to the opening of the key Thunder Horse platform in the Gulf of Mexico.

BP pumped 3.8m barrels of oil a day between July and September. This was 8,000 barrels a day less than a year ago when production was devastated by hurricanes which hit the Gulf of Mexico.

It was also 202,000 barrels below the level reached in the second quarter of this year. Lord Browne again acknowledged that the company faced several problems, but said his job now was to help correct them. “This is not about me. It’s about BP and how we put things right.”

The problems, which also include a fatal refinery explosion in Texas and allegations of market rigging, have seen its shares fall almost 20pc since April.

BP said yesterday that it was setting aside another $400m to cover compensation claims related to the 2005 blast, pushing the total bill, including repairs and lost profits to around $2bn.

In a research note yesterday, analysts at Citigroup said: “This was always going to be a difficult quarter for BP. We believe the operational and reputational recovery will take time for BP.”

Despite reports that the Russian government is putting pressure on Western energy companies, such as Shell, in order to get a larger slice of oil and gas revenues, Lord Browne insisted that BP was not affected by any such action.

The quarterly dividend is 5.2p, against 5p last year, bringing the increase over the past nine months to 8pc.

http://www.telegraph.co.uk/money/main.jhtml?xml=/money/2006/10/25/ccbp25.xml

1 Comment on “Daily Telegraph: Browne predicts wave of mergers in oil industry”

  1. #1 Mrs OSCHIDDE JONAS
    on Nov 30th, 2006 at 03:23

    From Mrs Oschidde Jonas
    Dearest in christ.

    My name is Mrs OSCHIDDE JONAS,a nationality of Tanzania. I got your contact from the British High commission office here, your esteem recomendation was given to me as a trust worthy person thus,I decided to write you this letter.

    I got married to late Mr. JONAS who worked with Tanzania embassy in Cote d’Ivoire for nine years before he died in the year Octorber 2003.We were married for twenty years with a child who is now in a bible school, I will want you to take my son (Saimon) as your own son and take a very good care of him as soon as the money is released to you by the bank.

    Before my husband’s death we were both born again Christians. When my late husband was alive we deposited the sum of $21 Million (Tweenty one million U.S. Dollars) “which he acquired from gold field he inherited from his late father” in an International Bank here for foreign establsiment project,but unfortunately he did not realise project before his death.

    Presently, this money is still with the International Bank. Recently my Doctor told me that I would not last for the next three months due to my cancer problem. Though what disturbs me most is my stroke. Having known my condition I decided to donate this fund to churches or better still a Christian individual that will utilize this money the way I am going to instruct here in.

    I want a person or church that will use this fund to churches, orphanages, research centres and widows propagating the word of God and to ensure that the house of God is maintained. The Bible made us to understand that blessed is the hand that giveth. I took this decision because I have and my late husband decided to use some of the money to work for God and my husband´s relatives are not Christians and I don´t want my family hard earned money to be misused by unbelievers. I don´t want a situation where this money will be used in an ungodly manner. Hence the reason for taking this bold decision.

    I am not afraid of death hence I know where I am going to. I know that I am going to be in the bosom of the Lord. Exodus 14 VS 14 says that the lord will fight my case and I shall hold my peace. I do not want any telephone communication in this regard because of my health and because my late husband’s family relatives are always around me and this could be dangerouse to me and my son’s live if they know about the money. I don´t want any of my husband family relatives to recieve this money. With God all things are possible.

    As soon as I receive your reply I shall give you the contact of the Bank where the money is, so that they will tell you the procedures to transfer the money to your country. I want you and the churches to always pray for me because the lord is my shepherd. My happiness is that I live a life of a worthy Christian.I shall also personally introduce you to the bank management as the rightful beneficiary to the money for transfer process in your name.

    Whoever that wants to serve the Lord must serve him in spirit and truth. Please always be prayerful all through your life.

    Any delay in your reply will give me room in sourcing for a church or Christian individual for this same purpose. Please assure me that you will act accordingly as I stated here.

    Expecting to hearing from you soonest. Remain blessed in the name of our Lord Jesus Christ.

    Mrs. Mrs OSCHIDDE JONAS

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