BP announces record high profits

July 29, 2008
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, LONDON, July 29 – British energy giant BP said on Tuesday that its net profit rallied by 28 percent to 9.47 billion dollars (6.02 billion euros) in the second quarter as oil prices surged to record highs.

BP\’s revenue soared by 49 percent to 111 billion dollars in the three months to June 30 compared with a year earlier as gas prices also soared, but production was flat at 3.83 million barrels of oil equivalent per day.

The group added in its earnings statement that it continues to work to resolve its dispute with Russian investors over their joint venture TNK-BP.

"However, currently, it is not possible to predict the ultimate outcome if these matters remain unresolved," the British group said.

BP was to hold a press conference to talk about its results and TNK-BP at 0930 GMT.

BP, the world\’s third biggest energy group, last week said it had recalled all 148 staff sent to Russia to work for TNK-BP amid ongoing Russian attempts to end foreign control of major energy assets.

BP added on Tuesday that net profit, excluding gains from the value of its crude oil inventories, grew six percent to 6.85 billion dollars in the second quarter.

Analysts had expected the figure to reveal profit of 7.82 billion dollars, according to Dow Jones Newswires. In the first six months of 2008, BP\’s net profit surged 41 percent to 16.92 billion dollars.

BP, Europe\’s second largest oil company, added that net profit almost doubled to 1.351 billion dollars in the second quarter from 686 million dollars one year earlier.

Kremlin adviser Arkady Dvorkovich rejected on Monday charges of political interference in the activities of TNK-BP and said the company\’s activities were not in danger.

The dispute between BP and its Russian partners in TNK-BP, which accounts for a quarter of BP\’s global oil output, is being closely watched as a test for the foreign investment climate in Russia\’s energy sector.

In early morning trade on Tuesday, the share price of BP rose 2.65 percent to stand at 533.25 pence on London\’s FTSE 100 index, which was down 0.19 percent at 5,302.30 points.

US broker Merrill Lynch maintained its "underperform" rating on the share price. In a note to clients it said its cautious stance was "largely driven by valuation and our view that the shares do not warrant a premium rating despite some signs of positive earnings/business momentum after a difficult few years."

During the second quarter meanwhile, crude futures spiked to a series of record highs as the dollar weakened and as investors also sought a haven amid unrest in major oil exporters Iran and Nigeria.

Oil prices went on to hit record highs above 147 dollars a barrel at the start of the third quarter, on July 11.

They have since fallen by more than 20 dollars on concerns that the global economic slowdown will weigh on energy demand, particularly in the United States — the world\’s biggest consumer of oil.

High oil prices have helped to boost profits at BP as it struggles to increase energy production. The group\’s net earnings had fallen in 2007 as it was hit by declining output following a turbulent year.

BP had faced a major boardroom scandal in 2007 as well as continued fallout from a fatal blast at its Texas City refinery in 2005 and a major pipeline leak in Alaska in 2006.

The unrest led to Tony Hayward being appointed chief executive and he quickly announced the axing of 5,000 jobs in a cost-cutting drive.

BP is the world\’s third biggest energy company in terms of stock market capitalisation behind number one ExxonMobil and Royal Dutch Shell.

BP\’s Anglo-Dutch rival publishes its second-quarter earnings on Thursday.

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