BP profits beat Q2 forecast

BP has posted a drop in half-year profits, but delivered better-than-expected second-quarter earnings after higher production offset lower oil prices.

BP cheered a 4 per cent year-on-year rise in production to 3.8 million barrels of oil equivalent a day. Picture: BP

The FTSE 100 oil giant revealed replacement cost profits - the market's preferred measure - held largely firm at just under $1.8 billion (£1.4bn) in the three months to 30 June, flat against the same quarter a year earlier.

On an underlying basis, second-quarter profits remained at $2.8bn. This was better than the $2.5bn expected in financial markets.

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BP cheered a 4 per cent year-on-year rise in production to 3.8 million barrels of oil equivalent a day, which helped counter a drop in the cost of crude.

But half-year results were dragged lower by a tough first quarter, when falling oil and gas prices left BP nursing a 7.4 per cent profits drop to $3.9bn.

BP also cautioned it expects third-quarter production to be lower than the second quarter, reflecting seasonal maintenance as well as the impact of Hurricane Barry on operations in the US Gulf of Mexico.

Bob Dudley, group chief executive of BP, said the firm was "right on target" at the halfway stage of its five-year plan.

He said: "Reliable performance and disciplined growth across our businesses are delivering strong earnings, cash flow and returns to shareholders."

Oil giants have been impacted by lower oil prices since the end of last year, with blue chip rival Royal Dutch Shell set to reveal the impact on its results on Thursday.

In its figures, BP said it made proceeds from asset sales of $1.5bn for the first half as part of a drive to make more than $10bn of divestments by the end of next year to help pay for its mammoth deal to buy BHP Billiton's US shale assets.

It also said it made $1.4bn of largely scheduled payments for the Gulf of Mexico oil spill disaster in 2010.

BP announced a dividend of 10.25 cents (8.41p) a share.