BP's Q3 net profit more than doubles year-over-year to US$4.9B, revenue up 31% to US$97.6B driven by higher oil prices; company to dispose of US$45B in assets to pay for damage from Gulf of Mexico oil spill

Graziela Medina Shepnick

LONDON , October 25, 2011 (Associated Press) – BP PLC reported Tuesday that third-quarter profits more than doubled thanks to higher oil prices, with the chief executive saying the results marked a turnaround from the disastrous Gulf of Mexico oil spill.

BP also announced that it now aims to dispose of $45 billion in assets, up from the $30 billion it originally set to raise money to pay for damage from the blowout on the Deepwater Horizon drilling rig on April 20 last year. Eleven rig workers were killed in the explosion and fire.

For the three months ending Sept. 30, BP had a net profit of $4.9 billion, compared with $1.8 billion a year earlier.

Revenue rose 31 percent to $97.6 billion. Brent crude averaged $112 a barrel in the third quarter, up from $77 per barrel a year earlier.

Investors welcomed the figure and bid BP shares up 2.2 percent to 447.9 pence in early trading on the London Stock Exchange on Tuesday.

"We have now reached a definite turning point," Chief Executive Bob Dudley said in a statement accompanying the earnings report.

"Our operations are regaining momentum and we are facing the future with great confidence."

Tony Shepard, analyst at Charles Stanley & Co., said BP "may have turned the corner."

"The key event will be the Department of Justice ruling on the criminal and civil investigation which is unlikely before 2012," Shepard said. "This outcome will determine the issue of negligence and the level of potential fines for BP."

Replacement cost profit, a measure watched by analysts, was $5.1 billion compared with $1.9 billion a year earlier. On an underlying basis, excluding non-operating items and accounting effects, replacement cost profit was down 4 percent to $5.3 billion because production was down 12 percent and maintenance costs rose.

For the first nine months of the year, BP reported a replacement cost profit of $15.9 billion, compared with a loss of $9.5 billion a year ago when the company absorbed $40 billion in charges because of the Gulf of Mexico spill.

BP said it is facing more than 600 lawsuits from the incident, and expects the total to rise. The company's potential liabilities "cannot be fully estimated at this time," BP said.

BP recently settled claims and counterclaims with its partners in the well, Anadarko Petroleum Co. and MOEX Offshore 2007 LLC, a subsidiary of Mitsui.

Still to be resolved are suits involving Transocean Ltd., operator of the Deepwater Horizon drilling rig, and Halliburton Co., which was responsible for cementing the well. The suits are scheduled to go to trial in New Orleans in February.

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