BP PLC reported a drop in production for the fifth consecutive quarter as production cuts at its Alaskan oil fields following a pipeline leak in August added to existing problems in the Gulf of Mexico.
BP, Europe's second-largest oil company, said that third-quarter production of oil and gas fell 0.6 percent to 3.824 million barrels a day from the same period a year ago. Production last rose on a year-on-year basis in the second quarter of 2005.
The company also reported lower refining margins, a drop in the price it gets paid for gas, a higher tax burden and lower production at its joint venture in Russia.
The third quarter result, which BP said reflected "the impact of divestments, maintenance and operational downtime," was also 218,000 barrels below the level reached in the second quarter of this year and underlined the problems facing the company.
BP's value has fallen 20 percent since April following the Prudhoe Bay fiasco in Alaska, an investigation into a fatal blast at a refinery in Texas City, Texas, delays to the opening of the key Thunder Horse platform in the Gulf of Mexico, and allegations of market manipulation in the United States.
Falling oil prices have also depressed BP shares, with crude hitting a seven-month low below US$59 a barrel Wednesday.
Shares in BP fell 2 percent in early trading to their lowest level for 16 months, but recovered to close 0.3 percent higher at 570 pence (US$10.74; euro8.47).
Its forecast followed revelations from ConocoPhillips on Tuesday it expects its own third quarter to be marred by lower U.S. natural gas prices and refining margins and weaker worldwide production.
ConocoPhillips, which has a stake in BP-operated Prudhoe Bay, said production on an equivalent basis will likely fall about 5 percent below the previous quarter's level, largely due to the shutdown of the Alaska field. Planned seasonal maintenance in the United Kingdom and Venezuela also hurt production.
The company estimated weighted U.S. refining margins of $14.86 per barrel, down 27 percent from $20.39 per barrel in the second quarter and 20 percent below $18.51 per barrel in the 2005 third quarter.
BP's trading update "does little to allay the general malaise surrounding the company," said Richard Hunter, head of U.K. equities at Hargreaves Lansdown stockbrokers. "The silver lining is that BP remains an oil behemoth in global terms, and its strong cash flow can be matched by few of its competitors."
"Its sheer size in many ways enables it to withstand the current problems," Hunter added.
Kepler Teather & Greenwood Merrion analysts said in a research note that BP will struggle to meet its full-year target of producing 4.1 million to 4.2 million barrels of oil a day, but that the company was on course to produce more than 4.88 million barrels of oil a day in 2010.
BP cut production in half at its Prudhoe Bay field in Alaska, which normally produces 450,000 barrels a day, following the pipeline leak in August. It said Tuesday that production there was back to 350,000 barrels per day.
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