2009-10-27 11:28:02
Oil giant BP has reported third-quarter profits well ahead of expectations,
sending its share price up 5%.
Its replacement cost profit between July and September was $4.98bn ( 3bn).
Experts said the figure had "obliterated" market forecasts.
But the profit was down 50% from the $10bn it made a year earlier as lower oil
prices continued to have an effect.
Oil prices have risen recently to about $80 a barrel, but are still well off
the $147 record high set last year.
Share spike
"The fall in earnings was well trailed," said Richard Hunter, head of UK
equities at Hargreaves Lansdown.
REPLACEMENT COST PROFIT
companies and reflects the current cost of supplies
the firm's stock of fuel products
"But the numbers nonetheless have obliterated market forecasts, as evidenced by
the spike in the share price in early trade."
Excluding one-off items, BP's profits were $4.67bn compared with analysts'
forecasts of about $3.2bn. The firm's shares rose 27 pence to 594p.
The company said that unit production costs were 18% lower than in the third
quarter of 2008, while oil and gas production was up 7% on last year.
Nick McGregor, oil analyst at Redmayne Bentley, said that BP's refining
business was also key.
"For every dollar that oil prices go up, BP make about $400m. For every dollar
that refining margins go up, they make about $950m," he said.
"The exploration and production is the most profitable in absolute terms
because it's the biggest bit, but refining is a big influence on the overall
bottom line."
'Giant' discovery
Net income at its Russian joint venture TNK-BP rose 34% to $1.7bn.
The project had been marred by a dispute between BP and the Russian
shareholders in the venture, and was only resolved in September last year when
Robert Dudley stepped down as TNK-BP's chief executive.
BP said the venture was well-positioned to deliver a solid performance in 2009.
BP was also buoyed last month by a "giant" new oil discovery in the Gulf of
Mexico.
The company said the discovery amounted to more than three billion barrels. Its
well in the region, dubbed Tiber, has been drilled to a total depth of about
35,055ft (10,685m), making it one of the deepest wells drilled to date.