British Petroleum said Wednesday that it expects its fourth quarter worldwide production to be up about 4% from 4Q2003 to 4.09 million boe/d mainly because of increases in Russia. However, higher taxes in Russia and costs associated with damage from Hurricane Ivan in the Gulf off Mexico and a blowout at an Egyptian offshore platform will take a bite out of its earnings.
BP said that its production for the year averaged 3.995 million boe/d, which was just short of its goal of 4 million boe/d, but up more than 10% from 2003.
Its Russian subsidiary, TNK-BP, continues to play a large role, supplying nearly 24% of its 4Q output, or 965,000 boe/d. However, higher taxes in Russia will cut earnings by $170 million in the quarter, the company said.
Hurricane Ivan added an extra $250 million in exploration and production division costs compared to the third quarter. The company said that costs would be partially offset by unrealized profit in stock, which will lift earnings by $70 million.
BP also said its production also would have been about 80 million boe/d higher if not for shutdowns brought on by Hurricane Ivan and the Egyptian well blowout.
The company added that it would take $2.3 billion in charges related to changes in its petrochemicals segment, including business exits, the closure of facilities and asset impairments.
Despite the setbacks, the company still is expected to report higher quarterly earnings next month thanks to record oil and gas prices.
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