Underlying replacement cost profit for Q2 was US$ 3.6 billion, 34% higher than the US$ 2.7 billion reported in Q2 2013, and 13% higher than the US$ 3.2 billion result for Q1 2014.
Commenting on the results, BP Group CEO, Bob Dudley, said: “This was another successful quarter, delivering both operational progress and robust cash flow. We are continuing to ramp up the major new projects that drive delivery of cash flow and are also now seeing benefits from our focus on operating with greater reliability and efficiency.
“This operational momentum keeps us well on track to meet our 2014 targets and underpins our longer-term commitment to grow distributions to our shareholders.”
Oil, gas and crude
Increasing oil and gas production from new upstream projects and increased processing of heavy crude oil by the Whiting refinery contributed to operating cash flow of US$ 7.9 billion in Q2. Total operating cash flow for H1 2014 was US$ 16.1 billion.
Divestments totaling US$ 3.4 billion have now been agreed towards BP’s expected total of US$ 10 billion divestments to be reached by the end of 2015. Most recently the company agreed the sale of its Hugoton gas assets in Texas for US$ 390 million.
BP’s upstream segment in the second quarter reported US$ 4.7 billion underlying pre-tax replacement cost profit, compared with US$ 4.3 billion in the corresponding period last year.
These results reflect the benefits of higher production in key regions and higher oil and gas realisations, although this was partly offset by the impact of divestments and higher non-cash costs.
Increasing output from key regions, mainly the Gulf of Mexico, pushed up overall underlying production of oil and gas, excluding Russia, by over 3% compared to 2013.
The end of the Abu Dhabi concession in January 2014, combined with divestment impacts, meant that reported upstream production, at 2.1 million boepd, was 6% lower. BP expects production for Q3 to be lower, mainly due to turnaround and seasonal maintenance activities.
Including Russia, reported BP Group oil and gas production averaged 3.1 million boepd. Underlying net income from Rosneft for Q2 was US$ 1.0 billion.
BP’s downstream sector reported underlying pre-tax replacement cost profit of US$ 0.7 billion, compared with US$ 1.0 billion in the previous quarter and US$ 1.2 billion for Q2 2013.
A weaker refining environment combined with a weaker contribution from supply and trading negatively impacted the result compared to 2013, although this was partially offset by benefits from increasing heavy crude runs at the Whiting refinery. During Q2, throughput of heavy oil at Whiting reached a high of 270,000 bpd.
So far this year, five new major upstream projects in BP’s key regions have started production. Most recently, the CLOV project in Angola achieved first oil on 12 June. Three of these five projects are in the deepwater Gulf of Mexico. Two further projects are expected to come on-stream in 2014.
The upstream sector is demonstrating greater operating efficiency, with average plant reliability for H1 higher than last year. Drilling performance continues to improve, while seven of the turnarounds planned for 2014 are now complete or in progress. In the downstream sector, refining availability was maintained above 95% for the quarter.
In exploration, BP has participated in 10 completed wells to date in 2014, which have so far resulted in two significant discoveries – Notus in Egypt and Orca in Angola. Between 15 and 17 wells are expected to completed throughout 2014.
Gulf of Mexico
The provision for litigation related to the Gulf of Mexico oil spill during the quarter was increased by US$ 260 million. The total cumulative pre-tax charge for the incident to date is now US$ 43.0 billion.
Adapted from press release by Katie Woodward
Read the article online at: https://www.oilfieldtechnology.com/exploration/29072014/bp-announces-q2-2014-results-1148/