Oil demand lifts BP 29pc

LONDON - BP, the second-largest publicly traded oil company, said profit rose 29 per cent in the first quarter to a record because of higher energy prices and production.

Net income increased to US$5.49 billion ($7.53 billion), or 25.6 cents a share, from US$4.26 billion, or 19.3 cents, in the year-earlier period, excluding gains from holding oil inventories, London-based BP said in a Regulatory News Service statement.

These are the first results for BP under the International Financial Reporting Standards adopted by companies in the European Union.

Oil prices averaged US$47.84 a barrel in the quarter, up 53 per cent from a year earlier, as demand increased, straining the ability of Opec producers to keep pace.

BP's report indicates rising profits are also likely this week when Exxon Mobil Corp and ChevronTexaco Corp report results for the period.

"There's still a pretty good wind behind the oil price," said Bruce Evers, an analyst at Investec Securities in London, before the report was released.

The oil and gas industry is the best-performing group in the Dow Jones Stoxx 600 Index in Europe, gaining 10 per cent so far this year. BP has lagged behind, rising 6.1 per cent to 539 pence at yesterday's close.

Excluding what BP called one-time items of US$535 million, first-quarter profit was US$4.96 billion ($6.8 billion). That compared with analysts' estimates of US$4.34 billion, according to the median estimate of seven analysts surveyed by Bloomberg.

The company said in March that it expected a one-time pretax gain of about US$1 billion for the first quarter because of the sales of BP stakes in Norway's Ormen Lange gas field and the UK Interconnector gas pipeline.

Including profit from holding oil inventories, first-quarter earnings were US$6.6 billion, compared with US$4.91 billion a year earlier.

BP reported first-quarter revenue of US$79.8 billion ($109 billion), up 16 per cent from US$69 billion a year earlier.

The world's largest and third-largest listed oil companies, Exxon Mobil and Royal Dutch/Shell Group, are also expected to show rising profits when they report earnings this week. BP and Shell are reporting earnings under new European accounting standards designed to help align US and European rules.

Exxon, BP and Shell together made US$16.5 billion in profits in the fourth quarter including restatements.

The new accounting standards would make it more difficult for analysts to predict first-quarter profits, said Neil McMahon, an analyst at Sanford C. Bernstein in London.

- BLOOMBERG