BP Profit Down Two-Thirds on Oil Spill Charges


LONDON — BP said Tuesday that its profit fell 66 percent in the third quarter after it set aside more money to cover costs related to the Gulf of Mexico oil spill.

The profit was $1.79 billion, down from $5.34 billion in the same period a year earlier. The figure was a marked improvement over the second quarter loss of $17.2 billion, however. BP shares rose 1.6 percent in early trading in London.

BP set aside another $7.7 billion to cover costs resulting from the Gulf of Mexico oil spill in the third quarter. The company said a delay in completing the relief well, decontaminating vessels and legal and administration costs were more expensive than it had anticipated. BP had already set aside $32.2 billion in the second quarter to deal with the spill, the worst in U.S. history.

Richard Hunter, head of British equities at Hargreaves Lansdown Stockbrokers, said the additional charge was a “stark reminder that the fallout from the spill will follow BP for some considerable time to come.”

The chief executive Robert Dudley is under pressure to improve BP’s finances and to start paying dividends again. The company halted payments after the April 20 explosion at the oil rig in the Gulf, and its shares remain about 35 percent below their value before the accident.

Its troubles have allowed rivals such as Royal Dutch Shell, which pays dividends, to attract investors. Some analysts also have warned that if BP’s shares continue to lag rivals, it could be vulnerable to takeover attempts.

Mr. Dudley, who replaced Tony Hayward in October, said Tuesday that BP’s board plans to review dividend payments at the beginning of next year.

BP counts many pension funds, which heavily depend on dividend income, among its shareholders.

Colin McLean, managing director at SVM Asset Management in Edinburgh, called the news on the dividend “a little disappointing.” He added: “The company now needs to show that it can grow the business from its smaller capital base.”

Mr. Dudley has already started to shake up BP’s structure in an attempt to restore investor confidence and show that BP was learning the lessons from the accident, which killed 11 rig workers. He has set up a new division to improve and monitor safety and he removed Andy Inglis, the head of exploration and production, who had been in charge of the drilling and capping of the Gulf well.

“BP is well on track for recovery after the tragic accident on the Deepwater Horizon drilling rig and subsequent oil spill,” Mr. Dudley said in a statement.

BP also has pushed ahead with selling $30 billion in assets to help pay for costs related to the oil spill. BP said Tuesday the sales program was “making good progress” and that it had agreements in place to sell assets worth a total $14 billion.

BP agreed to sell assets in Venezuela and Vietnam to its Russian oil venture TNK-BP, and a share in some oil and gas fields in the Gulf of Mexico in October. BP held almost $13 billion in cash at the end of September, it said.

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Stuart H. Smith is an attorney based in New Orleans fighting major oil companies and other polluters.
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