BP, Total Results Down; Yet Reflect Stronger Refining Environment

(RTTNews) - UK-based oil giant BP Plc. (BP.L, BP_UN.TO, BP) and French peer Total SA (TTA.L, TTFNF.PK, TOT) Tuesday reported lower profit for the first quarter, as oil prices declined sharply from the previous year. However, results reflected stronger overall refining environment.

BP said its pre-tax profit dropped to $2.276 billion from $5.270 billion in the prior year. Attributable profit fell to $2.602 billion from $3.528 billion.

Total revenue and other income declined to $54.92 billion from $93 billion, as brent crude averaged $54 per barrel compared with $108 last year.

BP's first-quarter replacement cost profit was $2.103 billion, compared to $3.475 billion a year ago. Underlying replacement cost profit for the quarter fell to $2.6 billion from $3.2 billion last year.

The Upstream segment reported underlying pre-tax replacement cost profit of $0.6 billion for the first quarter of 2015 compared with $4.4 billion for 1Q 2014. The result included a $545 million loss for BP's US Upstream business.

The division was hurt by lower oil and gas prices as well as weaker gas marketing and trading and $375 million costs associated with the cancellation of contracts for two deepwater rigs in the Gulf of Mexico that were no longer required for BP's reset drilling program.

Overall Group oil and gas production, including Russia, was 3.3 million barrels of oil equivalent a day or mmboe/d. Excluding Russia, reported Upstream production rose 8.3 percent to 2.3 mmboe/d and underlying production was 3.7 percent higher. Production increases were primarily due to the ramp up of production from new projects in key regions.

For the second-quarter, reported production is estimated to be lower than the first quarter, reflecting significant seasonal turnaround and maintenance activity, primarily in the Gulf of Mexico, and PSA entitlement impacts.

Underlying pre-tax replacement cost profit for BP's Downstream segment rose to $2.2 billion from $1.0 billion. The increase reflected the stronger overall refining environment, higher refining optimization and production, and improved marketing performance.

At the end of the quarter, the total cumulative pre-tax charge for the Gulf of Mexico oil spill was $43.8 billion. An additional charge of $332 million was taken in the quarter due mainly to additional business economic loss claims.

Bob Dudley, BP group chief executive, said, "We are resetting and rebalancing BP to meet the challenges of a possible period of sustained lower prices. Our results today reflect both this weaker environment and the actions we are taking in response."

Further, BP said it remains on track to divest a further $10 billion of assets by the end of 2015.

Additionally, BP announced a stable quarterly dividend of 10 cents per ordinary share, expected to be paid in June.

Meanwhile, Total said its first-quarter net income group share decreased to $2.66 billion from $3.34 billion in the prior-year quarter.

Excluding items, adjusted net income for the quarter was $2.60 billion, while it totaled $3.33 billion in the year-ago quarter, amid lower oil price.

Sales decreased 30 percent to $42.31 billion from $60.69 billion in the previous year. Hydrocarbon production was 2,395 kboe per day, up 10 percent from 2,179 kboe per day last year.

Adjusted net operating income from the Upstream segment was 56 percent lower at $1.359 billion, due to the dip in oil prices. Meanwhile, refining & Chemicals segment reported adjusted net operating income of $1.1 billion, up three times from last year amid higher margins.

The board of directors has decided to pay a first-quarter interim dividend of 0.61 euro per share on October 21.

Looking ahead to the second quarter, in the Upstream, production will be impacted by seasonal maintenance activity. Additionally, due to the lag effect in contractual formulas, gas prices will be further affected by the decrease in oil price.

Further, Total said the impact of the geopolitical tensions in Libya and Yemen on the company's results is limited due to the geographical diversity of Total's portfolio.

BP.L was up 1.45 percent in early trade at 483.80 pence. Meanwhile Total rose 1.69 percent in Paris to 50 euros.