UK giant BP reported soaring profits in its second quarter results due to high oil and gas prices but production remained flat.
BP said its replacement cost net profit jumped 6% to $6.85 billion compared with the same period a year ago.
The replacement cost result, which strips out unrealised gains from changes in the value of fuel inventories, was dampened by a $2 billion non-cash charge related to long term gas sales contracts which accounting rules force BP to treat as derivatives.
Excluding such charges and one-off items such as field sales, the replacement cost result was $8.63 billion, ahead of an average forecast of $7.7 billion in a Reuters poll of nine analysts.
For the half year, replacement cost profit was $13.44 billion compared with $10.93 billion a year ago, up 23%.
Production for the quarter was 3.83 million barrels of oil equivalent, broadly flat with the second quarter of 2007. BP said that after adjusting for the impact of lower entitlement in their production sharing agreements, output was around 6% higher than the second quarter of 2007 reflecting the continued ramp-up of production following the start up of projects in late 2007 and the first half of this year.
Meanwhile, BP’s share of second-quarter net income at its half-owned Russian joint venture, TNK-BP, almost doubled year-on-year to $1.35 billion.
BP also said its share in TNK-BP’s net income rose to $2.1 billion in the first half of the year from $848 million in the same period of 2007.
TNK-BP will report second-quarter results at a later date. Analysts view BP’s reports of TNK-BP financials as an important guide although the Russian company said they are not necessarily the same as TNK-BP’s own results.
TNK-BP’s chief operating officer Tim Summers said last week that the company expects its net profit to rise to $4.7 billion in the first half of 2008 from $2.1 billion in the same period of the previous year.
Revenue is seen increasing by 66% to $28.3 billion, while earnings before interest, taxation, depreciation and amortisation (EBITDA) are expected to almost double to $7.5 billion.
BP said its share of TNK-BP’s crude oil production fell to 825,000 barrels per day in the second quarter from 837,000 bpd in the same period of 2007.

(Upstream Online)