BP’s profits down, but downstream success

BP’s profits declined beyond analysts’ expectations for the second quarter of 2015. Depressed oil prices combined with several outside factors pushed the company’s underlying replacement cost profits down to $1.3 billion, compared to $3.6 billion for the same period the previous year.

The super-major took an exceptional $9.8-billion hit for a payout related to the 2010 Deepwater Horizon accident, following a deal struck with US authorities earlier in the month. The company was also forced to take a $600-million writedown for its operations in Libya, where worsening civil conflict is unsettling further exploration.

At the same time, the fall in oil prices has undercut BP’s upstream profits, which dropped to just $494 million, down from more than $4.7 billion during the second quarter of 2014. A depressed market was also the cause of poor revenue from Russia’s majority-government-owned Rosneft, in which BP holds a 19.75-percent share.

At the other end of the spectrum, profits from BP’s downstream business rocketed 154-percent to $1.9 billion from $722 million in 2014. BP’s estimated capital investment for 2015 has been slightly lowered to less than $20 billion, a year-on-year decline of 13 percent. The company also announced $7.4-billion in asset sales, putting in on track to complete $10 billion of planned divestments by the end of the year.