'Jam tomorrow' is BP's promise as second-quarter results disappoint

It reported underlying earnings of $5.6 billion (3.5bn) in the three months to the end of June, compared to $6bn expected by analysts as the effects of the Deepwater Horizon disaster in the Gulf of Mexico continued to depress output. Profits were still up on underlying levels a year ago thanks to a higher average oil price.

Chief executive Bob Dudley said the company was making "rapid progress" in its recovery from last year's disaster, but the process was having "the expected near-term impact on our volumes and costs".

He added: "We expect the momentum of our recovery to build into 2012 and 2013 as new projects come on stream, particularly in higher-margin areas; as we complete current turnaround activity; as we return to work in the Gulf of Mexico; and as uncertainties reduce."

BP's profits compared to a loss of $17.2bn a year earlier, in the immediate aftermath of the disaster, but were down from the $7.1bn it made in the first three months of this year. Production levels were down 11 per cent from pre-spill levels, reflecting the suspension of drilling in the Gulf of Mexico, maintenance work in the North Sea and Angola, and $25bn of asset sales.

The sales represent good progress in a planned $30bn divestment programme to help meet the compensation bill for the Deepwater Horizon disaster.

The company has sold assets in the US, Argentina, Egypt, Venezuela, Vietnam and Colombia to meet its Gulf of Mexico bill, and Dudley said the sales would mean output levels would be low for the third quarter as well.

But BP said it was making strategic progress in its expansion into new areas, purchasing exploration blocks in Brazil, securing operations in Azerbaijan and signing an alliance deal with India's Reliance Industries.

Dudley said: "BP is a company that is changing rapidly. Having stabilised the company while living up to our commitments in the US, we will now increase our focus on performance and long-term value creation. We are committed to seeing the true value of the business more strongly reflected in our share price."

BP's shares were down yesterday in a sign that investors remain to be convinced by the firm's recovery plan. Some analysts, bankers and investors are beginning to ask whether the best way for BP to address its valuation discount is to break itself up.

BP was dealt a major blow in May when it failed to secure a share swap and Arctic exploration deal with Russian oil group Rosneft.That deal was scuppered by oligarchs who own the other half of BP's existing Russian joint venture, TNK-BP.

Figures also released yesterday showed TNK-BP, Russia's third-largest oil producer, nearly doubled its second-quarter profit to $2bn in "an exceptional performance" aided by the fact oil prices have been driven higher by events in North Africa.