Oil giant BP reported surging second-quarter profits thanks to high oil prices, but a near $1 billion (€830 million) hit from a fatal blast at its Texas City refinery dashed expectations of a record result.
BP, the world's second-largest oil company by market capitalisation, added to a sense of disappointment by saying it would have to spend an extra $500 million to meet existing investment plans in 2005 and that the start-up of its flagship Thunder Horse platform in the Gulf of Mexico would be delayed.
Higher dividends and an acceleration in BP's share buybacks failed to counter the bad news, and BP shares closed 2 per cent lower at 629-1/2 pence, underperforming the DJ Stoxx European oil and gas index, which was down 0.8 per cent.
BP said its replacement cost net profit for the second quarter was $4.981 billion, up 29 per cent on the year.
The result would have been a record but for a non-operational charge of $826 million, mainly related to an explosion and fire at BP's refinery in Texas City, Texas, in March, which killed 15 people and injured 170 others.
The "clean" result, which ignores one-off events and is the measure most watched by analysts, was a record $5.807 billion, compared with an average forecast of $5.656 billion in a Reuters poll of 10 analysts, and $4.071 billion a year ago.
BP took a $700 million charge for fatality and personal injury compensation claims associated with the Texas City blast, which BP blamed on junior employees but labour unions blamed on procedural errors and the design of the isomerisation unit.
Additionally, losses due to a reduction in operations were $200 million in the second quarter, a spokeswoman said, a figure which could be repeated in coming quarters.
The clean-up and investigation of the incident will cost up to $40 million, while industry sources have said the reconstruction of the isomerisation unit would cost around $200 million.
Analysts initially expected the Texas City incident to cost about $400 million, but some later suggested it could reach $1 billion, for which BP does not have third-party insurance. The bad news was tempered by BP's announcement that it would accelerate buybacks and raise its dividend.
Chief executive John Browne said in a statement the firm would buy at least $6 billion of its shares in the second half, up from $4 billion in the first half and $7.5 billion in 2004.
The London-headquartered company raised its dividend to 8.925 cents from 8.5 cents for the first quarter. However, it said its gearing level was only 18 per cent, below a 20-30 target range, suggesting it has more scope to increase payments to shareholders.
