BP returns to profit in spill’s aftermath

BP seized on a report better than expected quarterly results Tuesday as further evidence that its activity is rebounding and that the company quickly put the worst of the Gulf oil slick behind.

Although third quarter results were substantially less than one year ago, BP returned to profit after the deadly explosion rig Deepwater Horizon in April the second quarter results sent in red.

The third quarter net profit fell to $ 1,790,000,000 from $ 5,340,000,000 in the period from July to September one year ago. The London-based oil major profits achieved, despite a huge load – 7.7 billion U.S. dollars – for spill-related costs. The charge was higher than analysts expected and a great reminder of the continuing toll of the disaster on the farm.
Still, BP executives saw in the report of the seeds of a comeback.

“These results show that BP is well on track for recovery,” CEO Bob Dudley said in a statement Tuesday.

BP has struggled to the legal, political and financial implications of April 20 blowout at her estate Macondo, where 11 workers slain and nearly 5 million barrels of oil in the Gulf of Mexico before it was covered include mid-July.

Meanwhile, rivals such as Shell, Exxon Mobil Corp. and ConocoPhillips have been boosted by improvements in oil and gas prices and refining margins, reflected in their earnings reports received last week.

BP benefited from similar factors in the quarter, which helped offset a 4 percent drop in the oil and gas production and absorb the spill to load 7.7 billion U.S. dollars.

BP, which is a 32.2 billion U.S. dollars in the second quarter accounted for the Gulf disaster, said that brought the bill to almost $ 40 billion in the third quarter after leakage costs were higher than expected. Mainly to blame one month long delay in the rescue operation and that ultimately sealed the Macondo also permanently in September.

Analysts found the last charge as a sign of BP Golf cleanup and containment costs are mostly behind us. But the bigger-than-expected size made by Barclays Capital analysts wonder whether future liabilities BP is underestimated.

Matti Teittinen, an analyst with IHS Herold, said that BP has set aside so far “seems a reasonable estimate at this time” but added, “there is still a long way in determining what their ultimate responsibility will be . ”

BP is still spending about $ 40 million a day in the ongoing remediation efforts and wind-down of the massive response unit, Chief Financial Officer Byron Grote told analysts in a webcast Tuesday from London. But he expects that amount to be “substantially lower” end of the year.

Furthermore, he repeated his belief that BP was not grossly negligent in the accident – a legal designation that could lead to greater risks – and that it will spill costs from a number of partners in the well.

BP has billed Japanese Mitsui & Co. and The Woodlands-based Anadarko Petroleum Corp. for 4.3 billion U.S. dollars of its spill cost, but the companies refused to pay.

Anadarko, a 25 percent owner in Macondo, told analysts Tuesday, the balance is bracing for a possible hit from oil spill liability, but insists that its contracts with BP to indemnify.

Large declined to say if BP is considering litigation against partners or try to settle the dispute out of court. But he said BP is prepared to honor its obligations.

Indeed, BP is more than half to a goal of selling $ 25 billion to $ 30 billion in assets to raise cash requirements for spill. And analysts responded well to hints Tuesday party was to restore dividend payments in February, after suspending them in June to save cash, and would be more than $ 18 billion in capital expenditures next year, topping earlier guidance.

Separately, BP said a government-imposed moratorium on deep sea drilling in the Gulf would have a negative impact on oil and gas production region in the U.S. until 2011.

Anadarko CEO James Hackett also said Tuesday his company was ready to work in the Gulf, but hoped to resume for “clarity” around a deep water permitting process that was revised after the spill.

Yet the company continue to submarine platform in deep water Caesar-Tonga project with Statoil, Shell and Chevron, in the current development planning at the Lucius and Vito projects, explained the Callisto pipeline at the Independence Square Hub and got a permit for a well workover on K2.

Anadarko said Caesar-Tonga was on target for mid-2011 production and was hopeful that she would see permits for the completion of the previously drilled wells “at the end of this year, if not the next few weeks.”