BP is making good progress in its drive to improve performance, chief executive Tony Hayward said recently as the company announced underlying profits of $8.9 billion for the third quarter of 2008, excluding non-operating items and fair value accounting effects.
Despite some operational upsets, including hurricane damage in the Gulf of Mexico and interruptions to output from its Caspian fields, BP’s oil and gas production was slightly up on the same period of last year and the underlying result for the refining and marketing business rose by 70%.
“Although it has since fallen away sharply, the high oil price of the third quarter obviously helped our absolute result,” Hayward said. “But this should not obscure very real operational improvements in refining and rigorous cost control across the company that kept our cash costs essentially flat compared with last year — despite immense inflationary pressures in the sector.
“We are making good on our promise to deliver the strategy we laid out earlier this year — upstream growth, downstream turnaround and corporate simplification. We are well-placed to weather the prevailing financial storm and to benefit from the business opportunities that may well arise from a downturn.”
Hayward said that although oil prices could dip further as the world enters recession, “I believe that BP is well-positioned to cope with such volatility. Our balance sheet is strong and we have committed less of our portfolio to high-cost options like tar sands and gas conversion than some of our peers.
“As I said, we think the current turmoil may in fact create opportunities for us and we will look at those very closely.”
Describing the pace of BP’s recovery as one of “steady acceleration”, Hayward said production growth would be underpinned well into the next decade by the series of major projects already under way, together with BP’s strong resource base and continuing exploration success. “In refining and marketing, we are closing the competitive gap against our peers.”
Hayward said there would be no let-up in the drive for corporate simplification, continued cost reduction and front-line efficiency in operations. “BP’s workforce across the world has responded powerfully to our determination to make every dollar count. Today’s results reflect those efforts. Our disciplined approach will continue and there is much more we plan to do.”