Energy giant BP announced a return to profit on Tuesday but revealed new shock estimates for the cost of its Gulf of Mexico oil spill, putting the expected bill at close to $40 billion.
The new figure is far higher than expected. BP said it had taken an additional charge of $7.7 billion during the third quarter, bringing the company’s own total estimated clean-up and legal costs to $39.9 billion.
The company also reported a net profit of $1.785 billion for the third quarter following a loss of $16.9 billion during the second quarter of this year, AFP says.
This latest result represents an impressive turnaround from BP’s dire previous quarter, in which it made a massive loss of $17bn. And it’s even more encouraging if you ignore one-off costs – like the small matter of paying compensation and costs to clean up the oil spill – without those, its underlying profits actually rose to $5.53bn. That’s 18% higher than the same period last year, and considerably up on analysts’ average forecast of $4.6bn, according to Reuters. And while part of that is thanks to higher oil prices, it’s also just a function of the fact that pumping the black stuff out of the ground is a hugely lucrative business.
But the company is still in for bumpy few months. Bob Dudley, the its new CEO, faces a huge challenge to overhaul BP’s operations even as it pays for the clean-up job; this will include selling off $30bn worth of assets and streamlining its oil exploration and production division – which, incidentally, saw earnings increase by more than $2bn in the last three months, Management Today reports.