Times Online: BP profits slide 17% as production falls

BP makes £24 million a day but the strong pound hurts dividend payments and output drops for the seventh quarter

April 24, 2007
Steve Hawkes

BP suffered a fresh blow today as it revealed that profits across the business have fallen nearly 20 per cent since the start of the year to $4.36 billion (£2.18 billion).

The oil and gas major blamed falling production and lower energy prices for the slump, which comes as it desperately tries to draw a line under one of the worst periods in its history.

Lord Browne of Madingley leaves as chief executive this July, 17 months ahead of schedule, following the fallout from the fatal Texas City refinery blast and a series of oil leaks at its Prudhoe Bay field in Alaska.

Nearly one in five shareholders voted against his pay package at BP’s annual general meeting earlier this month – the biggest protest vote at BP for a decade.

First quarter results today showed that while BP still made £24.2 million a day over the first three months of the year, the profits were down 17 per cent on a year ago.

Output dropped three per cent to 3.912 million barrels of oil and gas a day, the seventh consecutive quarter that production has fallen, after equipment failures in Azerbaijan and Alaska.

Today’s first quarter results also revealed that the strength of sterling means dividends for UK shareholders will fall. BP’s payout, in dollars, is up 10 per cent but in sterling terms the dividend drops 2 per cent to 5.151p per share.

Neither Lord Browne nor his successor as chief executive, Tony Hayward, made any comment in today’s results.

Peter Hitchens, analyst at Teather & Greenwood, said: “There’s no outlook, no strategy, they’re likely to keep quiet for six months or so until Hayward takes over and finds his feet.”

He added that BP’s profits were towards the bottom end of market expectations once exceptional gains of $363 million were stripped out.

BP separately announced it had made its thirteenth oil discovery in “ultra-deep” water off the coast of Angola, where it has operated since the 1970s.

It stuck to its 2007 production target for the group as a whole of 3.8 million to 3.9 million barrels a day.

BP is the first of the world’s oil majors to report first quarter results. ExxonMobil releases figures on Thursday, followed by Shell on May 3.

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