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UpstreamOnline: Results flag day for BP

By Upstream staff

UK supermajor BP saw its replacement cost net profit surge by 23% in the second quarter of the year, putting it at a record $6.118 billion, as high oil prices more than made up for a drop in output.

Excluding one-off items, the result was $6.112 billion, ahead of an average forecast of $5.976 billion from a Reuters poll of 11 analysts and up from $5.81 billion in the second quarter of 2005, when the headline result was dampened by a $822 million one-off charge.

The replacement cost figure excludes changes in the value of inventories, and analysts said this figure, excluding one-offs, is the best measure of BP’s underlying performance.

BP said net income at its Russian joint venture TNK-BP rose to $645 million from $641 million in the same period of 2005, on slightly higher production.

The good results were tainted by news of leaks at BP’s Thunder Horse platform in the US Gulf of Mexico. Subject to weather, BP hopes the platform -will start up in early 2007, over a year later than originally planned.

BP also said rising costs had forced it to raise its capital expenditure plans, and that it faced a higher tax rate, which was 36% in the quarter compared to 32% a year earlier.

Meanwhile, BP said it would spend an extra $1 billion on top of the $6 billion it had already earmarked to upgrade safety at its US refineries and to repair and replace pipelines in Alaska, where leaks have occurred, over the next four years.

BP chief executive John Browne said in a statement that a major review by independent external auditors had been set in place, after allegations of market manipulation at BP’s propane trading operation.

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