BP profit drops 66% on spill charges

BP Plc said profit fell 66 per cent after taking a further charge of $7.7 billion related to the biggest oil spill in US history.

Third-quarter net income dropped to $1.8 billion, or 9.4 cents a share, from $5.3 billion, or 28.2 cents, in the year- earlier period, London-based BP said today in a statement. Excluding one-time items and inventory changes, profit beat analyst estimates.

Chief Executive Officer Robert Dudley said BP is “well on track” for recovery with sales agreements in place for about $14 billion of assets, about half of the target needed to foot the bill for the Gulf of Mexico accident. A delay in completing the relief well required to seal the leak pushed the total charge BP booked up to $39.9 billion, and the company reiterated its plan to consider restoring the dividend early next year.

“The underlying results are good, but they’re hit by another charge,” said Peter Hitchens, an analyst at Panmure Gordon & Co in London. “This starts to clear up some of the uncertainty. It’s going to take some time.”

Beat estimates Excluding one-time items and inventory changes, profit was $5.5 billion. That beat the $4.6 billion mean estimate of 16 estimates in a Bloomberg News survey. The results were boosted by a lower tax rate compared with a year earlier and improved earnings from refining.

BP rose 1.8 per cent to 431.50 pence as of 9:40 am in London.

Production slipped to 3.8 million barrels of oil equivalent a day from 3.9 million a year earlier. Asset disposals will reduce output by about 100,000 barrels a day in the fourth quarter, BP said. Royal Dutch Shell Plc, Europe’s biggest oil company, beat analyst estimates with a profit of $4.9 billion in the third quarter.

Exxon Mobil Corp, the world’s largest company, posted its largest profit increase in six years to $7.35 billion.