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BP announces mixed results in Q2 report

29th July 2014

BP has announced its financial results for the second quarter of 2014, with overall profit down compared to last quarter but with underlying replacement cost profit for the quarter at USD 3.6bn; 34 per cent higher than the USD 2.7bn reported for the same period in 2013 and 13 per cent higher than the USD 3.2bn result for the first quarter of 2014

BP announces mixed results in Q2 report
Five new major upstream projects in BP’s key regions have started production so far in 2014 – most recently, the CLOV project in Angola achieved first oil on 12 June

“This was another successful quarter, delivering both operational progress and robust cash flow. We are continuing to ramp up the major new projects that drive delivery of cash flow and are also now seeing benefits from our focus on operating with greater reliability and efficiency,” said Bob Dudley, BP group chief executive.

“This operational momentum keeps us well on track to meet our 2014 targets and underpins our longer-term commitment to grow distributions to our shareholders.”

Rising oil and gas production from new and recently-started higher-margin upstream projects and increased processing of heavy crude oil by the newly-modernised Whiting refinery contributed to operating cash flow of USD 7.9bn in the quarter. Total operating cash flow for the first half of 2014 was USD 16.1bn.

In the second quarter, BP’s upstream segment reported USD 4.7bn underlying pre-tax replacement cost profit, compared with USD 4.3bn a year earlier and USD 4.4bn in the first quarter of 2014.

Compared to a year earlier, the upstream result reflected the benefits of higher production in key regions and higher oil and gas realisations. This was partly offset by the impact of divestments and higher non-cash costs.

Increasing output from the key regions, primarily the Gulf of Mexico, drove overall underlying production of oil and gas, excluding Russia, up by over 3 per cent compared to a year earlier.

The end of the Abu Dhabi concession in January 2014 together with divestment impacts, however, meant that reported upstream production, at 2.1 million barrels of oil equivalent a day (mmboed), was 6 per cent lower. Reported production in the third quarter is expected to be lower due primarily to turnaround and seasonal maintenance activities.

Including Russia, reported group oil and gas production averaged 3.1 mmboed.

Reported underlying net income from Rosneft for the quarter was USD 1.0bn. BP received a dividend payment of approximately USD 700m earlier in July.

The downstream reported underlying pre-tax replacement cost profit of USD 0.7bn, compared with USD 1.0bn in the previous quarter and USD 1.2bn for the second quarter of 2013. Both a significantly weaker refining environment and a weaker contribution from supply and trading negatively impacted the result compared to a year earlier, although this was partially offset by benefits from increasing heavy crude runs at the Whiting refinery. During the quarter, throughput of heavy oil at Whiting reached a high of 270,000 barrels a day.

Five new major upstream projects in BP’s key regions have started production so far in 2014 – most recently, the CLOV project in Angola achieved first oil on 12 June. Three of these five projects are in the deepwater Gulf of Mexico. Two further projects are expected on-stream in 2014.

Greater operating efficiency is being demonstrated in the upstream, with average plant reliability for the first half higher than a year earlier, drilling performance continuing to improve and seven of the turnarounds planned for 2014 complete or underway. In the downstream, refining availability was again maintained above 95 per cent for the quarter.

In exploration, BP has participated in 10 completed wells to date in 2014 which have so far resulted in two significant discoveries – Notus in Egypt and Orca in Angola. 15-17 wells are expected to be completed over the whole year.

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