LONDON (dpa-AFX) - BP Plc. (BP.L, BP_UN.TO, BP) Tuesday reported increased profit for the second quarter, despite decreased production. The oil giant also warned that further international sanctions on Russian energy firm Rosneft, in which it has a significant stake, could have a material adverse impact on its investment.
'If further international sanctions are imposed on Rosneft or new sanctions are imposed on Russia or other Russian individuals or entities, this could have a material adverse impact on our relationship with and investment in Rosneft, our business and strategic objectives in Russia and our financial position and results of operations, the firm said in a statement.
Russia is being isolated by the world due to its involvement in the Ukraine crisis.
BP's profit before taxation increased to $5.15 billion from $4.12 billion in the year ago quarter.
Profit attributable to shareholders grew to $3.37 billion from last year's $2.04 billion. Earnings per American Depository Receipt or ADS improved to $1.09 from $0.64 in the previous year.
Underlying replacement cost profit, which is adjusted for non-operating items and fair value accounting effects, increased 34 percent to $3.6 billion.
The Upstream segment reported $4.7 billion underlying pre-tax replacement cost profit, up from $4.3 billion a year earlier, reflecting the benefits of higher production in key regions and higher oil and gas realizations.
In the Downstream segment, underlying pre-tax replacement cost profit fell to $0.7 billion from $1.2 billion, amid a weaker refining environment and a weaker contribution from supply and trading.
Sales and other operating revenues dropped to $93.96 billion from $94.71 billion in the year-ago quarter.
Reported production for the quarter fell 6 percent to 2.106 million barrels of oil equivalent per day or mboe/d.
Excluding Russia, underlying production rose 3 percent due to increasing output from the key regions, primarily the Gulf of Mexico. Including Russia, reported group oil and gas production averaged 3.1 mmboed.
BP said the provision for litigation related to the Gulf of Mexico oil spill was increased by $260 million in the quarter. The total cumulative pre-tax charge for the incident so far is $43.0 billion.
The company also announced a quarterly dividend of 9.75 cents per ordinary share, same as the previous quarter but up 8.3 percent from a year earlier. The dividend is expected to be paid on September 19.
Bob Dudley, BP CEO, said, 'This was another successful quarter, delivering both operational progress and robust cash flow. We are continuing to ramp up the major new projects that drive delivery of cash flow and are also now seeing benefits from our focus on operating with greater reliability and efficiency.'
Dudley added that this operational momentum keeps the firm well on track to meet its 2014 targets and underpins its longer-term commitment to grow distributions to shareholders.
Looking ahead, BP expects third-quarter reported production to decline sequentially, reflecting planned major turnaround and seasonal maintenance activities in Alaska and the Gulf of Mexico.
The seasonal reduction is estimated to be slightly larger than last year due to phasing of these activities.
BP is gaining 0.6 percent in early morning trading on the LSE at 499.63 pence.
Copyright RTT News/dpa-AFX