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Archive for Wednesday, November 3, 2010

BP turns 3rd-quarter profit

November 3, 2010

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BP PLC Chief Executive Bob Dudley

BP PLC Chief Executive Bob Dudley

— BP PLC is once again reporting profits even with an estimated $40 billion price tag for the response to its blown out well in the Gulf of Mexico.

In this waterfront city, where many lost their livelihoods to the summer of oil, a mixture of relief and melancholy greeted the news Tuesday. A financially healthy BP means jobs and compensation, but residents still reeling from the worst offshore oil spill in U.S. history are waiting for some good news of their own.

BP said that costs related to the April 20 oil spill dragged down its third-quarter profit by more than 60 percent. The London-based company earned $1.79 billion from July through September, compared with $5.3 billion a year earlier. But the fact that BP returned to profits at all, coming after a loss of $17.2 billion in the second quarter, indicated the company’s operations remain solid despite the spill.

“That’s real good news they’re making money because at least we know they have the ability to pay us over a long period of time because we’ve still got a lot of problems,” said shrimp processor Rudy Lesso, whose Biloxi, Miss., business is down about 25 percent because much of the public is still afraid to eat Gulf seafood.

BP has set up a $20 billion compensation fund to pay victims of the oil spill, cutting roughly $1.7 billion in checks so far. But the process has been slow and cumbersome for struggling Gulf coast residents.

BP’s third-quarter performance fell well short of the industry norm. All the other major oil companies, except Chevron, have reported stronger third quarter profits thanks to higher oil and gas prices.

The company’s $40 billion estimate for its overall spill response was $7.7 billion higher than its previous estimate provided during its second-quarter results released this summer, largely due to unanticipated additional expenses. The company had already spent $11.2 billion responding to the spill by the end of September.

None of that, however, kept BP Chief Executive Bob Dudley from delivering a rosy prognosis.

“What I can report today is that BP is now in recovery mode,” Dudley said Tuesday.

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