By Justin Scheck and Ian Walker
LONDON-- BP PLC reported a fall in first-quarter profit as the energy giant continues to reshape itself in the aftermath of the Deepwater Horizon explosion and oil spill.
BP's production for the three months ended March 31 fell 8.5% to 2.13 million barrels of oil a day and the company warned that second-quarter production will be lower, mainly because of planned maintenance in the higher-margin North Sea and Gulf of Mexico regions.
BP said underlying first-quarter replacement-cost profit, which strips out inventory gains or losses, fell to $3.23 billion, from $4.22 billion last year. Replacement-cost profit is similar to net profit, according to U.S. generally accepted accounting principles.
Revenue slipped to $91.71 billion, from $94.11 billion a year earlier. Net profit was $3.53 billion, from $16.86 billion a year earlier, which was boosted by a $12.5 billion gain the sale of its stake in TNK-BP.
BP increased its first-quarter dividend to 9.75 cents a share, from 9 cents a share last year.
Since the 2010 Deepwater Horizon disaster, BP has booked write-downs of about $42 billion for legal settlements and cleanup costs related to the Gulf of Mexico incident, which killed 11 workers. BP continues to face uncertainty in U.S. courts, where it awaits penalties under the Clean Water Act. To pay its legal costs, BP has shed billions of dollars worth of assets as part of a plan to become smaller and more profitable.
The company said its upstream division, which includes oil exploration, development and production, reported an underlying pretax replacement cost profit of $4.4 billion for the first quarter, down from $5.7 billion in the same period last year, hurt by asset sales and a $521 million charge related to its decision not to develop it Utica shale project in Ohio.
BP's downstream division, which includes refining operations, also reported weaker profit, of $1 billion down from $1.6 billion, because of a weaker refining environment.
The company said it is nearing completion of its current $8 billon share buyback program, with $7.6 billion spent repurchasing shares for cancellation. BP added that it would use some of the proceeds from further asset sales-- including its sale last week of assets in Alaska--for more share buybacks.
BP said it was too early to asset the impact of the U.S. naming Rosneft Chief Executive Igor Sechin as one of the individuals on its latest list of Russians targeted by sanctions. BP has a near-20% stake in Rosneft, making it the biggest foreign investor in Russia's oil sector, and the U.K.-listed group's Chief Executive Bob Dudley sits on the Russian company's board.
Under the terms of the U.S. sanctions, BP wouldn't be barred from dealing with Rosneft, though Mr. Dudley, an American citizen, would be unable to have direct business dealings with Mr. Sechin.
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