Oil Spill Isn't Enough to Deter Strong Profits for BP
Oil spill critics may not want to know this... But BP PLC has returned to profit in the third quarter as it recovers from the impact of April's Gulf of Mexico oil spill, but says it still cannot estimate the full cost of the disaster.The company reported Tuesday a net profit of $1.79 billion, compared with a loss of $17.2 billion in the second quarter but still below a profit of $5.34 billion a year earlier.
Replacement cost profit - a key industry benchmark - was $1.85 billion, way below analysts' forecasts of around $4.5 billion. The third quarter figure released compared to a loss of $17 billion in the second quarter and a profit of $7.36 billion in the comparable period a year ago.
Earnings were dented by a pretax charge of $7.7 billion related to the Gulf of Mexico spill, bringing the total charges this year to $39.9 billion.
BP's exploratory Macondo well blew out on April 20, and continued pouring out oil until July 15. BP completed sealing the well on Sept. 19.
Third-quarter expenses included the spill response, containment, relief well drilling, grants to affected U.S. states, claims paid and money owed to the U.S. government.
"The amount provided for future costs reflects ongoing response, remediation and assessment efforts, BP's commitment to the Gulf of Mexico Research Initiative, estimated legal costs expected to be incurred in relation to litigation, remaining payments to the escrow account, claims center administration costs and an amount for estimated penalties for strict liability under the Clean Water Act," BP said.
BP is building up an escrow fund to pay for the spill by raising around $30 billion from selling assets. It has already has raked in around $9 billion from the sale of assets in Egypt, Canada, the U.S. and Colombia.
The third-quarter report was the first for the company under its new chief executive, Bob Dudley, who replaced Tony Hayward.