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Published: Tuesday, 5/1/2012

Gulf spill claims drop BP earnings

BY JULIA WERDIGIER
NEW YORK TIMES

LONDON — BP said Tuesday that earnings fell 18.5 percent in the first quarter of this year, saying that production was hurt by the sale of assets to pay claims related to the Gulf of Mexico disaster two years ago.

Profit fell to $5.9 billion in the first three months of this year from $7.3 billion in the similar period last year. Revenue rose 9 percent, to $96.7 billion.

BP has been selling assets worth about $23 billion over the last two years to pay for costs related to the incident in 2010, which killed 11 workers aboard the Deepwater Horizon rig and sent nearly 5 million gallons of oil into the gulf.

BP "made a good start against our strategic priorities for 2012," said Robert W. Dudley, BP's chief executive, in a statement.

The company is continuing to sell assets to reach its goal of raising $38 billion by the end of next year. It is also seeking to gain access to new deepwater exploration acreage.

BP said it was selling some assets in the Gulf of Mexico, including the Marlin, Horn Mountain and Holstein fields, which do not have any strategic importance for the company. BP said it was on track with its plan to start six exploration projects in 2012, including in Angola and in the Gulf of Mexico in the second quarter.

Oil and gas production in the first quarter fell 6 percent to 2.45 million barrels of oil equivalent a day as the effects of a drilling moratorium in the Gulf of Mexico over the last two years continued to weigh on the company.

Two years after the oil spill in the Gulf of Mexico, BP's overall costs related to the incident are still unclear. BP said Tuesday that it paid a total of $16.6 billion into a trust fund, and it expects payments to end in the fourth quarter of this year, a year earlier than it had initially expected.

In March, BP had reached a settlement with lawyers representing individual and business plaintiffs worth about $7.8 billion, to be paid from the trust fund. BP also paid $8.3 billion to cover claims by individuals and local businesses.

Since the oil spill, Dudley has been shrinking the company to focus on exploration, especially in deep waters, where it says its expertise lies. BP's share price is still well below where it was before the accident.



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