BP profits up on asset sales, higher oil prices

Oil giant BP saw a 16 percent rise in first-quarter profit as asset sales meant to pay for the Gulf of Mexico oil spill overshadowed the ongoing cost of the accident.

The replacement cost profit — a key measure that excludes those asset sales — was off by more than $100 million to $5.4 billion due to lower oil and gas production and higher spill charges.

You can look at a summary BP’s financial report here.

Net income was $7.2 billion for the quarter ended March 31 compared to $6.2 billion for the same period a year ago.

Revenue was up 18 percent to $88.3 billion after the company sold more than $24 billion in assets to pay for the Gulf spill.

Investor Relations chief Fergus MacLeod noted in a conference call with analysts that BP’s oil trading operations made “some outstanding contributions” to the company’s profitability in the first quarter. 

The company recently noted that a $1 increase in the price of Brent crude translates to about $380 million in pre-tax profits.

U.S. Rep. Ed Markey, D-Mass., pointed to the profit report as another reason to repeal tax breaks for oil producers.

“When BP makes billions in profits, even after the year they just had, you know it’s time to cap the gusher of tax breaks that have been subsidizing the biggest oil companies for decades,” Markey said in a statement. “Oil companies may have stopped the BP oil spill, but they want to keep the flow of taxpayer dollars going, even as they make billions in profits from those same taxpayers at the pump.”

Shares of BP were down slightly Wednesday morning to about $46.21 cents.

First quarter production for BP was 3.58 million barrels of oil equivalent per day — an 11 percent drop from a year ago but more like a 7 percent drop after adjusting for the effect of acquisitions and divestments.

Much of the production decrease came from BP’s high margin areas, namely the Gulf of Mexico due to the deep-water drilling moratorium imposed after the spill; turnaround and maintenance activity in the North Sea and in Angola; and a disruption in oil from along the Trans-Alaska Pipeline System.

Gulf oil production was about 370,000 barrels per day for the quarter, off about 100,000 barrels per day from a year ago.

BP reaffirmed that it has applied for new drilling permits in the Gulf of Mexico and hopes to resume such operations in the second half of the year. Fergus said there are plans for four development wells in the Thunder Horse play and two appraisal wells at Atlantis.

Chief Financial Officer Byron Grote said in the conference call he expects second-quarter production to be even lower based on both the slow pace of Gulf deep-water permitting, asset sales and aggressive plans for more maintenance overhauls at major BP facilities.

“But there will be long term benefits  in terms of reliability,” Grote said.

BP said it will pay a 7 cents per share dividend, about half the dividend it was paying before the Gulf spill. The company  suspended its dividend for nine months responding to political and public pressure, before resuming it in the fourth quarter of 2010.