Furthermore, BP saw its second quarter replacement cost profit fall 1% over Q2 2006 to $6.1 billion. Replacement cost profit evaluates the sum it would cost to replace a company’s assets and, according to the Associated Press, the industry believes that this is the most accurate assessment of an oil company’s underlying performance.
BP’s operations appear even less successful when the replacement cost profit for the first half of 2006 is taken into account, as it fell 8% over the first half of 2006, to approximately $10.5 billion.
BP’s reported total hydrocarbon production for the quarter was 3.8 million barrels of equivalent per day, down 5% compared with the second quarter of 2006. However, full year production in 2007 is still expected to be in the range of 3.8 to 3.9 million barrels of oil equivalent per day, in line with the guidance provided earlier in the year, the company said.
The company’s Q2 2007 results also include net non-operating gains of $767 million, comprised of disposal gains of just over $1 billion primarily related to the sale of the Coryton refinery and the sale of the US West Texas pipeline system to Occidental Petroleum Corporation, partially offset by an impairment charge of $258 million.
According to the Associated Press, BP’s shares fell 0.5% on the results. However, the news agency reported that Tony Hayward, BP’s chief executive, has vowed to improve the company’s operating performance.
