Quarterly net loss hits BP

A dreadful second quarter in which BP was hit by lower realised prices and a reduced contribution from its Russian joint venture, TNK-BP, resulted in a net quarterly loss of $1.39bn (£885m). This meant that half-year returns fell short of analyst expectations, but the consequent 3 per cent fall in BP's share price was relatively modest, indicating that the overhang from the Gulf of Mexico disaster remains the principal drag – and potential catalyst – for valuations.

First-half replacement cost profits (less gains or losses from inventories) fell by 53 per cent on the comparable period in 2011 to $5.17bn. The bulk of this contraction was attributable to a $4.69bn decline between the first and second quarters. BP was also forced to write-down $4.87bn on its assets, including some US refineries, the suspended Liberty oil and gas project in Alaska and a range of shale gas assets. The group also booked $847m in quarterly pre-tax non-operating losses relating to the Gulf of Mexico spill.

Average daily production, excluding TNK-BP, fell by 7 per cent on the first quarter to 2.275m barrels of oil equivalent, while full-year guidance was maintained.

Prior to these figures JPMorgan expected full-year EPS to decline 14 per cent to $1.01 (2011: $1.15).

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