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BP Amoco Earnings Drop 41%

BP Amoco Earnings Drop 41%

BP Amoco first quarter replacement cost profit, before exceptional items, was $761 million after adjusting for special charges of $84 million for merger integration costs. Results were down 12% from the previous quarter and down 41% from the first quarter of 1998. The decrease reflected a substantial deterioration in the trading environment, the company said.

Domestic gas prices averaged $1.60/Mcf in the first quarter, compared to $1.80/Mcf in the first quarter of 1998. Domestic gas production was 2,433 MMcf/d in the first quarter of 1999, up from 2,428 MMcf/d in the first quarter of 1998.

Exploration and production operating profit for the quarter of $904 million, after adjusting for special charges of $86 million, was down 26% from the first quarter last year when oil and gas prices were significantly higher. The effect of lower prices was partially offset by cost savings and higher production.

Lower cash costs contributed $200 million to results. There was an exceptional charge for the quarter of $860 million after tax that related mainly to the first phase of restructuring following the merger of BP with Amoco. The major components of the restructuring charge are severance and property rationalization.

BP Amoco Group CEO John Browne said, "This is a good debut result for BP Amoco in a tough environment. The reasons are twofold. First, there are underlying performance improvements from lower cash costs and higher volumes in all businesses and, second, we are beginning to see the benefits of the merger coming through to the bottom line."

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