LONDON (AP) — BP PLC on Tuesday reported lower than expected earnings for the second quarter even as costs from last year's Gulf of Mexico oil spill diminished.
The fallout from the disaster continues to weigh on the company's oil production, down 11 percent from pre-spill levels, and the company said the damage to its reputation could have a long-lasting impact on its prospects.
BP reported a net profit of $5.6 billion for the three months ending June 30, compared with a loss of $17.2 billion a year earlier.
Replacement cost profit, a closely watched industry benchmark, was $5.3 billion compared with a loss of $17 billion a year earlier. The second quarter result was lower than the average market forecast of about $6 billion.
Last year's earnings were hit by a $32 billion charge for responding to the Gulf of Mexico crisis.
The lower than expected profit hit BP's shares. They were trading 2.5 percent lower at 463.45 pence ($7.58) as trading opened on the London Stock Exchange.
BP said it has so far paid $6.8 billion for economic and environmental restoration in the Gulf of Mexico, including $5.1 billion from a $20 billion trust fund to settle individual claims.
In the second quarter payments from the trust fund totaled $2.1 billion, including $873 million to individual and business claimants.
The company said the majority of the cleanup on the U.S. Gulf coast was completed in the first three months of the year, while "limited" work continued on marshes and barrier islands. No further work is planned on the seabed, BP said.
The company acknowledged that "the Gulf of Mexico oil spill has damaged BP's reputation, which may have a long-term impact on the group's ability to access new opportunities, both in the U.S. and elsewhere."
In the short-term, the disaster has had a clear impact on BP's production levels.
During the second quarter, its oil and gas production was 3.43 million barrels of oil equivalent a day, down 11 percent from a year earlier, BP said that primarily reflected "the ongoing impacts to Gulf of Mexico production as a result of the suspension of drilling, and the continuing divestment program."
Full-year production is expected to remain close to that level, BP said.
Chief Executive Bob Dudley was upbeat about the company's prospects, saying he expects future cash flows to grow faster than output.
"We expect the momentum of our recovery to build into 2012 and 2013 as new projects come on stream, particularly in higher-margin areas; as we complete current turnaround activity; as we return to work in the Gulf of Mexico; and as uncertainties reduce," Dudley said.
Dudley added that 2011 had been "an unusually good year" for gaining access to resources, with new tracts awarded in Australia, Indonesia, Azerbaijan, the United Kingdom, the South China Sea and Trinidad.