The under-pressure boss of BP today insisted the beleaguered oil giant had reached a “turning point” despite production falling as it continues to sell off billions of dollars worth of assets in the wake of last year’s Gulf of Mexico oil disaster.
Chief executive Bob Dudley revealed the group was increasing the size of its asset sale programme from $30bn to $45bn as a part of a programme to boost its financial firepower.
BP posted replacement cost profits of $5.14bn for the three months to September, up from $1.8bn a year ago when BP was hit by heavy charges for cleaning up the Gulf spillage.
BP will also release a detailed strategic plan next February, which will include an update on its dividend policy. BP held its quarterly dividend at 7 cents per share.
Profits fell 3% quarter-on-quarter and daily oil production dropped by 12% to 3.32 million barrels, due to the suspension of production in the Gulf, though BP expects output to be higher in the current quarter. The company was producing 4 billion barrels a day before the disaster.
Mr Dudley said production in the last three months was a “low point” for the group but he would not be drawn on whether the increase in planned divestments would hit future production.
BP has already sold sites in the US, Egypt, Venezuela, Vietnam and Colombia.
BP said it intends to boost the amount of cash it generates by 50% by 2014 through new exploration projects and after it ceases payments to its $20bn Gulf of Mexico trust fund a year ahead of schedule at the end of 2012.
Mr Dudley denied the the group was building up its cash reserves in case of a possible adverse outcome in next year’s trial over the Gulf disaster. He said the group was preparing “vigorously” for the case.
The American, who has come under pressure following the collapse of a deal with Russian group Rosneft to explore in the Arctic region, said the group intends to double its spending on new exploration.
The increased investment was based on assumptions of an oil price of 100 US dollars per barrel, while new exploration could include up to seven drilling rigs in the Gulf of Mexico, where the group recently restarted operations.
BP has endured a torrid time since the Deepwater Horizon accident in the Gulf, which saw 11 oil rig workers killed and caused the biggest oil spillage in US history.
It has already set aside $41bn for the clean-up and other possible associated costs.
However, payments into the trust fund, set up after former chief executive Tony Hayward was brought to task by President Barack Obama, will be completed early following a recent $4bn settlement with Macondo well partner Anadarko.
Mr Dudley has struggled to restore BP’s reputation after the incident and ran into fierce criticism himself following the failure of the share swap and exploration deal with Rosneft.
At 451.2p, the share price is still almost one third below the level before the Gulf tragedy, though some analysts said today’s figures suggested hope for the future and shares rose 3% as the performance was widely better-than-expected.
Richard Hunter, head of equities at Hargreaves Lansdown Stockbrokers, said: “The real possibility that BP is at an inflection point has bolstered the shares in early trade.”
But Tony Shepard, analyst at broker Charles Stanley, added that the Gulf of Mexico oil spill continues to be a major issue for the group and the key event will be the Department of Justice ruling on the criminal and civil investigation.
This outcome will determine the issue of negligence and the level of potential fines for BP, he added.