Higher commodity prices, cost savings and mergers contributed toBP Amoco Plc’s $14.2 billion windfall year-end profits last year,which broke British profit records and were second only toU.S.-based rival Exxon Mobil Corp.’s $17 billion profit for 2000.BP’s profit in 1999 was $6.2 million.

Along with its profit news, the London-based energy giant alsoannounced it had success with two wells drilled last year in theCrazy Horse Exploration unit in the Gulf of Mexico, considered tobe one of the largest oil fields discovered in the Gulf. The unitis located about 125 miles southeast of New Orleans in MississippiCanyon Block 822 and confirms suspicions of at least a billionbarrel discovery. BP owns 75% interest and Exxon Mobil owns 25%.

When the earnings were announced, CEO John Browne said “thestrong trading environment, together with the benefits of recentintegration and restructuring and productivity improvements, hasproduced an outstanding worldwide result for BP.” Browne said thatthe group was on track to meet its cost savings and improvement oncapital targets by the end of this year.

The adjusted replacement cost profit figure for the fourthquarter set a record of $4.09 billion, up from $2.12 billion forthe fourth quarter of 1999. Fourth quarter profits were just belowforecasts by First Call/Thomson Financial of between $4.1 billionand $4.2 billion.

Natural gas production rose by more than a third to 8.62 Bcf/d,but production of oil and gas liquids actually was lower in thefinal quarter of 2000, totaling 1.93 MM bbl/d, down from 2.05 MMbbl/d in 1999. The company said the decline followed lower capitalspending — BP’s oil production was 15% lower in the UnitedKingdom and 11% less in the United States, which was compensatedpartly by increased production in other locations.

BP’s profits are calculated on a replacement-cost basis, whichtakes into account the cost of replacing the company’s oil reservesat current prices and deleting one-time items. The figures alsoexclude costs for goodwill that result from acquisitions.

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