BP plc's share price slid 3% in early trading Tuesday after the London-based major missed its production targets and reported that its 4Q2006 oil and natural gas output fell for the sixth straight quarter on start-up delays in the Gulf of Mexico (GOM) and reduced oil flow from its Prudhoe Bay field in Alaska.
In a statement, BP reported oil and gas output dropped 5% to 3.82 MMboe/d from 4.02 MMboe/d in 4Q2005. The results will put total production for 2006 at around 3.92 MMboe/d, down 2.3% from 2005. At the beginning of 2006, BP estimated its output for the year would reach 4.1-4.2 MMboe/d. However, in October, BP scaled back its forecast to 3.95 MMboe/d following pipeline corrosion problems at its Prudhoe Bay facilities (see Daily GPI, Oct. 25, 2006).
BP, which is scheduled to report its quarterly earnings on Feb. 6, still expects earnings to rise on higher oil prices. However, refining profits likely will be lower.
The Prudhoe Bay slowdown contributed to BP's first annual decline in output since it completed its acquisitions of Amoco Corp. and Atlantic Richfield Co. Its global output jumped 10.8% in 2004, mostly on new supply from its TNK-BP venture in Russia. In 2005, output rose only 0.4%, which BP blamed on the GOM hurricane season (see Daily GPI, Jan. 12, 2006). The last time production rose from year-over-year levels was in 2Q2005.
In the final quarter, BP said a recovery in production from summer maintenance in the North Sea and Alaska operations and gains from new projects in Azerbaijan and North Africa were "partly offset by weather related delays to Alaskan loadings, unusually low seasonal gas demand, OPEC quota restrictions, and reduced entitlements under Production Sharing Contracts."
BP last year delayed the start-up of two GOM platforms: Atlantis, which now won't ramp up before the second half of 2007, and Thunder Horse, which is now scheduled to begin operations in late 2008 (see Daily GPI, Sept. 19, 2006).
ConocoPhillips, the third-largest U.S.-based major, last week warned that "significantly lower" worldwide refining margins and poorer-than-expected results in its midstream and chemicals operations would push 4Q2006 earnings lower (see Daily GPI, Jan. 5).
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