BP oil earnings report shows signs of weakness

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.

About the author

Stephen Beard is the European bureau chief and provides daily coverage of Europe’s business and economic developments for the entire Marketplace portfolio.


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