Oil Business Not So Bad: BP Posts 83 Percent Profit Growth

LONDON — British oil company BP PLC reported a huge 83-percent rise in third-quarter net profit Tuesday on the back of surging energy prices between July and September.

BP, Europe's second-biggest oil producer behind Royal Dutch Shell PLC, posted net profit of $8.05 billion for the July to September quarter _ up from $4.41 billion in the same period a year earlier.

The company said it was well-placed to continue to reap profits despite the fact that the price of oil has now more than halved from July's all-time high uf $1.47. Oil traded around $64 per barrel Tuesday.

Revenue for the third quarter rose 45 percent to $103.2 billion from $71.3 billion the previous year.

"The high oil price of the third quarter obviously helped our absolute result," said Chief Executive Tony Hayward.

But Hayward also said that he was confident the company would continue to do well even though oil prices could dip even further in the face of an anticipated global economic slowdown that would cut the demand for crude.

"I believe that BP is well-positioned to cope with such volatility," Hayward said, saying the company had not committed as much money as its rivals to high-cost ways of producing oil, such as mining tar sands and converting gas.

"We think the current turmoil may in fact create opportunities for us," added Hayward.

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Hayward, who replaced John Browne last year, has focused on bringing new production and refining capacity on line to improve earnings, which have lagged behind rivals such as Exxon Mobil Corp. and Shell. For example, the company began production at Gulf of Mexico oil field Thunder Horse, which was discovered nine years ago, in June.

"These numbers have comfortably surpassed the top end of expectations," said Richard Hunter, head of British equities at Hargreaves Lansdown Stockbrokers. "The change of management seems to be reaping positive early returns."

The company's closely watched replacement cost profit soared 148 percent to $10.03 billion, from $4.04 billion.

The replacement cost figure is viewed by many analysts as the best measure of an oil company's underlying performance because it excludes gains or losses related to any changes in the value of oil companies' fuel inventories, instead measuring the amount it would cost to replace assets at current prices.

BP makes the bulk of its profits in its upstream business, which incorporates exploration for and production of oil. Pre-tax profits in that division doubled to $12.5 billion.

Underlying profit for the downstream business, which includes refining oil and selling it at BP's 24,000 gas stations worldwide, made a pre-tax profit of $1.3 billion, up 70 percent compared to the third quarter of last year.

BP shares rose 4.3 percent to 457 pence ($7.13) in morning trading on the London Stock Exchange.

Comments

[dukeitout]

Is there anyone not living under a rock that didn't think this quarters oil profits would be huge? They reflect the past. Stock prices should anticipate large future decreases in both revenues and profits for big oil. It's hard to justify big stock price increases recently based on the past figures. Oil could very well go to $50/barrel if we experience even a moderate worldside recession.

[kapo]

Oil prices headed back up folks, probably $80-$100 a barrel where OPEC wants it. Do any travel you need to do now while gas is still 'cheap'.

[Oldbuck]

When there is no competition in the market that what you can do we are down to just a few major oil companies and they control all of the refineries. They can charge what the market bares. If we do not go to alternative fuels we will raked over forever. Just listen to Boone Pickens we have enough natural gas to have a temporary clean fuel but do you think the oil companies want to develop it not with that kind of profits.

[imsosure]

For anyone who might care BP = British Petroleum, I never see it noted as such, just think it's kind of sneaky to present it as something else.

[dukeitout]

The name of the company is "BP plc" and not "British Petroleum" as it was years ago. Check it out.

[TallGrrl]

An oil company made more money? Imagine that.
Gas was up to and above $5/gal...and the oil companies made a profit.
Wow. Will wonders never cease??

Sheesh.

[clsmithj]

my dad and my sister works there. I've been trying to apply there myself. Oil companies are a cash cow.

[GirlsRule]

Ka-Ching Ka-hing
I'm riding my bike more and more....

[boomer1949]

And they're laughing allll the way to the bank.

[4everdem]

Are

you

f'ing

kidding

me?

83%?

[AZterritory]

How nice. And Alaska takes these profits from the rich companies and gives them to the poor (i.e. ALL) Alaskans. Smells like Socialism to me.

[FatherWolf]

Not so long ago, Gov Palin thought that collective ownership and spreading the wealth around was a good thing.

http://www.newyorker.com/talk/comment/2008/11/03/081103taco_talk_hertzberg

A few weeks before she was nominated for Vice-President, she told a visiting journalist"Philip Gourevitch, of this magazine"that "we"re set up, unlike other states in the union, where it"s collectively Alaskans own the resources. So we share in the wealth when the development of these resources occurs."

[PT6]

At least Bush's OIL BUDDIES are DOING GREAT!

That should help his retirement be very pleasant while the rest of us lost OURS!

[iambusto]

To all the morons who blame Oil companies for our misery. please consider these facts first.

1) the biggest culprit in the eyes of these complainers is Exxon. Well, Exxon is the 17th biggest oil company by reserves. not biggest, not 10th biggest, 17th biggest. got it?

so who are the top 16. well, state oil companies. Aramco (saudi), Kuwait, Brazil, Venezuela (in no particular order).

How much pricing power do you think a western company that is 17th biggest has in setting the price of crude?

2) Earlier Exxon & Conoco used to own their gas stations in the US. They sold all their gas stations in the US. so they dont even control the price of gasolene in retail gas stations.

Still wanna complain. Call your president and senators to ask the foreign govts. to lower the price of crude :)

[DuganS1]

The price of crude is determined on an exchange, not by foreign governments fixing prices. OPEC sometimes is able to effect the price by increasing or decreasing production at times, but even that has proven less effective over the past years as their market share of the global oil market continues to shrink.

[strangerinthenight]

What about Exxon's hoarding those royalties, which were supposed to be reimbursed to the government once the price of oil is over $35/gallon. For the last 2 years, the price per gallon went over $100/barrel.

What about that ?

[mjt218]

Exxon provides the royalties it is required to by law. During the Clinton administration the Government left out the reset out of leasing agreements for +$35/barrel for the Deepwater Gulf of Mexico to encourage investment. Should the government invalidate these legal contracts?

Exxon has a very small footprint in the Gulf of Mexico anyway . . . BP and Shell are the biggest producers in the area.

[MCTSilverlakeCA]

Better yet...look up the lists online of everything ELSE that's made from petroleum and substitute natural products for it instead, thus cutting our petroleum products consumption by an even more substantial amount. Did you know for example that bubblegum has petroleum in it? So do plastic bags, perfumes and solid deodorants, lip glosses, all plastics, hair dyes, kitchen cleaning supplies, and many other products... look up and use Green Substitutes... plain old cheap white Vinegar for example (about $1.50 a gallon) cleans many surfaces, cuts grease easily, leaves a scent an ant or insect hates, and is ground water safe. Remember macrame? Bring it back and make yourself some shopping grocery bags that won't wear out... there are lots of other ways to save us from OPEC's greed... .

[Oldbuck]

They still control the refineries in the United States and do control the price of gasoline there is no money in gas station is the reason they sold all of them. The price of gasoline is control by major oil in the United States wake up. The oil companies don't care what the price of foreign crude is they will still make their profit.

[darthdarcy]

Nationalize the American Oil Industry and all Holdings...!

Simple as that..

[iambusto]

Oil industry is one of the industry that actually takes care of itself. I say stop all the subsidies to oil companies fine.

But they dont ask for govt. handouts. they actually manage their business well.

stick to industries run by morons like airlines and auto.

[darthdarcy]

If we Nationalized the American Oil Industry we could cuts prices by 30-33% and still have $50-60 billion towards developing alternative and renewable energy sources and that's at $60-70 per barrel..!

The 30-33% cut in cost would create an economic boom that would benefit every American and promote and boost commerce not constrict it also we could hire more employees creating needed jobs and pay more attention to the failing Oil Infrastructure..

Stop think like 19th century robber barons think as futurists..it's the 21st Century..!

All major energy should be provided to the people and nation by the government that's their job, To Serve The People..!

[DuganS1]

And watch what is left of the "American Oil Industry" fall into ruin and see oil prices rise further.

[kaski]

And why shouldn't the lower 48 states get kickbacks from oil companies like Alaskans get. We should if they don't nationalize the oil companies!!

[bola47]

since the pipeline was built under a federal lease agreement the booty should be shared by all.

[darthdarcy]

83% increase but they couldn't invest in maintaining there infrastructure so thousands of gallons of oil spill in Alaska..Remember..?

BP tries to sell itself as "Green" the only green their interested in is "dirty green paper with dead presidents on it, we call $$$$ Money..!

We need to Nationalize the America Oil Industry and all holdings and all Major Energy if we are to be successful and progress in the 21st century..!

Simple as that..

[hypnotoad72]

Despite the recent big cuts to the cost of oil barrels?

Wowzers.

[mjt218]

This is 3rd quarter, which ended in September . . . The price didn't really start coming down until the last few weeks.