BP reported a $1.4 billion loss for the second quarter. Investors were already discontented with the performance of the company and its first American chief executive, Robert W. Dudley and the earnings report did nothing to assuage their concerns. Peter Hutton, an oil analyst at RBC Capital Markets in London, said, “This is a very, very disappointing set of results. They missed across all fronts by a wide margin.”
$4.8 billion in write-downs on refineries, shale gas assets, and a project in Alaska wiped out its operating profits. BP recently halted a project called Liberty on the North Slope in Alaska because of environmental and other concerns. The company has also written off $2.1 billion on shale gas acreage because of lower natural gas prices. BP’s results would have still been 17% below the consensus estimates of analysts even stripping out the $4.8 billion in write-downs.
The declining value of BP’s American refinery system was responsible for the remaining $2.7 billion write-down. The company has come to realize from other sales that two of its United States refineries that they are trying to sell, including a giant one in Texas City, are not worth the value they had on the company’s books. Mr. Hutton said, “Managing competing priorities is always a problem. If you want to be thorough and make sure everything is right, it is a major, major exercise.”
Mr. Dudley has repeatedly expressed his determination to make BP a safer, more reliable, and ultimately more profitable company. He is facing an uphill battle as the company’s stock price is down about 30% from its level at the time of the disastrous Gulf of Mexico oil spill in April 2010. The 2010 spill has cost the company $38 billion in charges, including an additional $847 million during the last quarter.
BP’s oil production in the United States was down 25% compared with the same quarter a year earlier. BP has been a leader in developing deepwater oil fields in the Gulf of Mexico. These properties produce some of the most profitable oil in the company’s portfolio. BP’s gulf production has dropped sharply over the past two years due to repairs and a temporary drilling hiatus after the 2010 accident.