BP plc Tuesday reported second quarter profit of $7.3 billion, 30% higher than the $5.6 billion a year earlier. The company’s replacement cost profit was $6.1 billion, up from about $5 billion a year earlier. All segments — E&P, Refining and Marketing, and Gas, Power & Renewables — showed improvement, although costs were higher.

CEO John Browne pointed to continued world economic growth as underpinning increased prices. The profit increase came as production declined slightly worldwide in all categories (net of royalties): crude oil to 2,355 million b/d in 2Q06 from 2,437 million b/d in 2Q05; natural gas liquids from 182 million b/d a year ago to 176 million b/d in 2Q06; other liquids from 2,619 million b/d in 2Q05 to 2,531 million b/d in the recent quarter and natural gas from 8,661 MMcf/d in second quarter of 2005 to 8,624 MMcf/d in 2Q06.

But the basis for the increased bottom line can be clearly seen in one set of statistics. Crude oil realizations erupted from $47.79/bbl in the second quarter of 2005 to $65.96/bbl in the recent quarter.

Browne announced he would be retiring at the end of 2008. In a news conference in London he also said the company was taking steps to improve its operations in the United States, according to a Wall Street Journal report, which have been plagued with problems such as refinery fires, pipeline leaks and charges of attempted price manipulation in its propane gas trading. The measures include additional spending at its refineries on safety and engineering improvements and the same for its oil pipeline system in Alaska. BP also is appointing an independent advisory board for its U.S. operations and planning an independent audit of its trading operations.

Gas production in the United States for 2Q06 (net of royalties) totaled 2,493 MMcf/d, up from 2,485 MMcf/d in the same period of 2005. Production in the first half of 2006 was down slightly at 2,489 MMcf/d from 2,688.MMcf/d in the first half of 2005. At $5.44/Mcf prices in the second quarter were down slightly from the $5.83/Mcf recorded in 2Q05 and down materially from the $6.91/Mcf in the first quarter of 2006. This year’s first half, however, is still running ahead of 2005 with an average price of $6.17/Mcf compared to $5.57/Mcf in the first half last year.

Worldwide BP’s gas production was down just slightly in the second quarter at 8,624 MMcf/d, compared to 8,661 MMcf/d in the second quarter of 2005.

Interestingly for those who are wondering where LNG may be headed BP collected more recently in the United Kingdom for its gas than it did in the United States. UK prices went from $4.82/Mcf in the second quarter 2005 to $7.87 in 1Q’06 and $5.67 in 2Q 2006. For the first half of this year UK prices averaged $6.92/Mcf compared to $5.21 in the same period in 2005. Worldwide BP’s natural gas prices went from 4.38/MMcf/d in 2Q05 to $5.54 in 1Q’06 and $4.44 in 2Q06. The first half average worldwide in 2006 was $4.99/Mcf, up from $4.32 for the corresponding 2005 period.

In the United States BP’s realizations for natural gas liquids continued to increase from $28.04/bbl in 2Q05 to $33.25/bbl in 1Q’06 to $37.32/bbl in 2Q06. U.S. production dropped slightly from 127 million b/d in 2Q05 to122 million b/d in 1Q06 and 121 million b/d in 2Q06.

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