Oil major BP said second-quarter net profits soared and beat analysts' expectations thanks to high oil prices.
BP said yesterday its replacement cost (RC) net income, which strips out unrealised gains from changes in the value of fuel inventories, rose six per cent to €4.3 billion.
The RC result was dampened by a €1.26 billion non-cash charge related to long-term gas sales contracts which accounting rules force BP to treat as derivatives and value using spot prices.
Excluding these charges and one-off items such as field sales, the RC result was €5.4 billion, ahead of an average forecast of €4.9 billion in a Reuters poll of nine analysts.
Oil prices averaged over €76.1 a barrel in the second quarter - almost double the level in the same period last year - before rising to a record high above €93.3/barrel on July 11.
The world's third-largest non-government-controlled oil company by market value said production was broadly flat compared to the same period last year, at 3.83 million barrels of oil equivalent per day (boepd). This was in line with analysts' forecasts.
A BP spokesman said the results were helped by a lower-than-expected tax rate which was due to a lag on tax payments at its Russian joint venture TNK-BP, which BP is locked in a battle for control of with its Russian and Russian-born partners.
Profits at BP's refining division collapsed to €342 million from €1.7 billion in the second quarter of last year.
BP's refining portfolio is focussed in the US, where it said margins halved compared to the same period last year.
BP said it would pay a dividend of 14 cents per share, slightly ahead of what analysts had expected.
BP plc (BP) is a holding company and its three business segments are Exploration and Production, Refining and Marketing and Gas, Power and Renewables.
Exploration and Production's activities include oil and natural gas exploration, development and production (upstream activities), together with related pipeline, transportation and processing activities (midstream activities).
The activities of refining and marketing include the supply and trading, refining, marketing and transportation of crude oil, petroleum and chemicals products.
Gas, Power and Renewables activities include marketing and trading of gas and power, marketing of liquefied natural gas (LNG), natural gas liquids (NGLs) and low-carbon power generation through its Alternative Energy business.
During the year ended December 31, 2007, BP acquired Chevron's Netherlands manufacturing company, Texaco Raffiniderij Pernis BV. In April 2008, BP registered in Russia its subsidiary BP Exploration Services.