BP Scores Record Profits in Q1

High U.S. commodity prices helped lift BP Plc to a record quarterly profit. Tuesday, the company announced its first quarter adjusted replacement cost net profit before goodwill of $4.126 billion, up 52% from a year ago. However, BP, ranked third in the world, did not exceed its earnings forecast of $3.56-$4.23 billion --- a feat accomplished by leaders Exxon Mobil and Royal Dutch/Shell Group.

Because of BP's high exposure in North American natural gas markets, it has outperformed Exxon 10% so far this year, and has beaten Shell Transport & Trading 7%. Because of its North American acquisitions, the company is expected to do even better as the year progresses. Earnings per share rose 32% to 18.36 cents from a year ago, which the company said reflected the diluting effect of acquisitions.

Oil and gas production was up 13% from a year ago, but without its acquisitions, including ARCO, BP actually has grown production only 2% in a year's time. It is predicting an annual growth rate in 2001 of between 5.5% and 7% in oil and gas, and CEO John Browne said the company was "on track to achieve our announced targets with higher reported production being a particular feature."

Browne said the quarter's results "gives us confidence that our discipline in cost management and investment selection is enabling delivery on our agenda for profitable growth."

Exploration and production set a record for the quarter, with its work concentrated in North America. Two more successful discoveries offshore Angola were announced as well, along with a significant oil discovery in the Gulf of Mexico deepwater. Capital expenditures in E&P were $1.9 billion, about twice that of first quarter 2000, with the developments of Crazy Horse and Holstein fields and the Mardi Gras pipeline in the Gulf of Mexico approved.

"BP's production for 2001 is expected to be consistent with existing growth targets," said Browne. However, as if to prepare investors for a less-than-stellar second quarter of 2001, Browne said, "second quarter production will reflect the usual seasonal effects of lower gas offtakes and maintenance shutdowns."

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