BP 3Q net profit down 29 percent
( AP ) - BP PLC reported a 29 percent slump in third-quarter net profit on Tuesday due to higher maintenance costs and outages at key refineries, but some analysts said the worst might be over after a run of operational problems at Europe's second-largest oil company.
The company posted net profit of $4.4 billion for the three months ended Sept. 30, down from $6.2 billion over the same period of 2006. Revenue rose 2.7 percent to $72.6 billion.
Like most other oil and gas companies, BP faced lower refining margins and gas prices in the quarter, but its exposure to those reduced margins was magnified by operational troubles that included temporary shutdowns at its Whiting, Indiana and Texas City refineries.
It is also still dealing with the fallout of earlier problems such as an Alaskan oil spill and a fatal 2005 blast at the Texas refinery, which have resulted in ongoing higher maintenance costs.
Quarterly replacement cost profit - which excludes changes in the value of crude inventories, measuring the amount it would cost to replace assets at current prices - fell 45 percent to $3.87 billion, compared with $6.98 billion in the same period last year.
Viewed by many analysts as the best measure of an oil company's underlying performance, the figure was the lowest since the fourth quarter of 2004, despite a 70 percent rise in oil prices in the two years since.
However, the profit decline was well flagged by new Chief Executive Tony Hayward, muting the effect on the company's share price, and investors appeared hopeful that BP is in the early stages of a turnaround following the departure of former CEO John Browne.
Hayward, who succeeded Browne on May 1, acknowledged earlier this month that BP had lagged its peers over the last few years because of poor management and launched a comprehensive structural change - cutting the number of business units and stripping out management layers.