Downstream earnings rise at BP as margins swell
7/28/2015 12:00:00 AM
Profits in BP's downstream business nearly tripled from a year earlier, the company reported Tuesday, owing to strong margins and improved performance within petrochemicals.
BP said its underlying pre-tax replacement cost profit for the downstream segment was $1.9 billion, compared with $2.2 billion in the first quarter and $0.7 billion in the second quarter of 2014.
"Compared to last year, the result was driven by good refining performance and capture of improved margins, a higher contribution from supply and trading and stronger earnings from both the lubricants and petrochemicals businesses," the company said.
Elsewhere in the downstream, BP noted that refining activity ceased at its Bulwer refinery in Australia in the second quarter. Additionally, the company's new, technology-advantaged purified terephthalic acid (PTA) plant at Zhuhai in China is now fully commissioned and operational.
Overall, BP's second-quarter profit adjusted for one-time items and inventory changes dropped 64% from a year earlier to $1.3 billion. That missed the $1.7 billion average estimate from industry analysts.
The decline in overall earnings resulted from weaker upstream performance amid the current environment of low oil prices. A boom in oil trading in early 2015 faded in the second quarter, while a halt to operations in Libya eroded earnings from oil and gas exploration.
“In the past few weeks oil prices have fallen back in response to continued oversupply and market weakness and the recent agreements regarding Iran," said CEO Bob Dudley. "I am confident that positioning BP for a period of weaker prices is the right course to take, and will serve the company well for the future.
“The external environment remains challenging, but BP moved quickly in response and we continue to do so," Dudley added. "Our work to increase efficiency and reduce costs is embedding sustainable benefits throughout the group, and we continue with capital discipline and divestments.”
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