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Nodding donkey pumping units work at one of the oil wells at the BP-operated Wytch Farm site which is western Europe's largest onshore oil field on February 25, 2011 near Poole, England. - 

Jeremy Hobson: The British oil company BP is reporting a sharp drop in profits. The company made just $238 million last quarter, compared with more than $5 billion a year ago.

And as Marketplace's Stephen Beard reports, the BP oil spill is only partly to blame.

Stephen Beard: The spill continues to take its toll. BP is pumping less oil due to increased rig safety maintenance. And the bill for compensation is rising. The company has set aside a further $850 million for potential claims. But beyond the Gulf, BP is floundering in a bigger sea of troubles.

Nick McGregor of brokers Redmayne-Bentley says the falling price of oil and gas has hit the value of BP’s assets.

Nick McGregor: On every front BP has had to turn around and say : what we own isn’t worth what it used to be.

To take account of its declining assets, BP has lopped $5 billion off its profits. McGregor says the company is becoming vulnerable.

McGregor: BP in its current state does certainly look as though it could become a target for one of the larger polayers in the sector.

BP says its expecting an upturn next  year.

In London, I’m Stephen Beard for Marketplace.