LONDON (AP) — UK oil company BP reported a worse-than-expected second quarter net profit of $2 billion as lower oil prices, higher taxes and a drop in income from its operations in Russia took their toll on the company.
The net profit, although up from a loss of $1.5 billion in the same period of last year, missed analyst expectations of $2.56 billion according to Factset. Underlying replacement cost profit, which strips out the changes in the value of inventories, was down 23 percent on the same time last year at $2.71 billion.
The company attributed its higher tax bill mainly on the impact of the stronger dollar. It added that the fall in value of the Russian rouble and a lag in export duty had also adversely affected its bottom line.
BP also made more provisions for the 2010 oil spill in the Gulf of Mexico, increasing the total by about $200 million to $42.4 billion. The figure includes a $1.4 billion provision for the settlement with the plaintiffs' steering committee, which brings that figure to $9.6 billion.
The explosion on the Deepwater Horizon platform killed 11 workers and released millions of gallons of oil into the gulf, wreaking economic and environmental damage across several southern states.
CEO Bob Dudley said in a statement that the results showed "strong underlying pre-tax performance" and the group was "seeing growth in production from new high-margin projects and are making good progress in exploration and project delivery."
Keith Bowman, equity analyst at Hargreaves Lansdown Stockbrokers, says BP's new production ventures have moved forward in Brazil, India and the South China Sea.
"In all, BP is a company trying to look forward but remaining firmly anchored to the past," Bowman said. "A full resolution of its Gulf of Mexico accident is still in the balance, whilst both BP and the wider industry remain hostage to uncontrollable factors such as the oil price, government appetite for tax revenues and the strength of the broader global economy."