BP returned to profit in the third quarter as higher oil prices helped it recover from the impact of April's Gulf of Mexico oil spill, though it said it still cannot estimate the ultimate cost of the disaster, now at about $40 billion US.
The company reported Tuesday a net profit of $1.79 billion, compared with a loss of $17.2 billion in the second quarter but still below a profit of $5.34 billion a year earlier.
Replacement cost profit — a key industry benchmark — was $1.85 billion, way below analysts' forecasts of around $4.5 billion. The third-quarter figure compared to a loss of $17 billion in the second quarter and a profit of $7.36 billion in the comparable period a year ago.
Earnings were dented by a pretax charge of $7.7 billion related to the Gulf of Mexico spill, bringing the total charges this year to $39.9 billion.
For the third straight quarter, BP paid no dividend but promised to review the policy before announcing fourth-quarter results in February.
The company's exploratory Macondo well blew out on April 20, and continued pouring out oil until July 15. BP completed sealing the well on Sept. 19.
Third-quarter expenses included the spill response, containment, relief well drilling, grants to affected U.S. states, claims paid and money owed to the U.S. government.
Builds escrow fund
The company faces a fine of up to $1,100 under the Clean Water Act for each barrel of oil spilled. BP said it calculated its potential liability using a range of flow estimates, and assumed the company would not be found grossly negligent.
BP is building up an escrow fund to pay for the spill by raising around $30 billion from selling assets. It has already has raked in around $9 billion from the sale of assets in Egypt, Canada, the U.S. and Colombia.
BP's own investigation admitted a share of the blame, but also laid responsibility on Transocean, which owned the drilling rig, and contractor Halliburton. BP holds a 65 per cent stake in the failed well, and has sought to hold minority partners Anadarko Petroleum Co. and MOEX Offshore responsible for some of the costs. So far it has billed the partners for nearly $4.3 billion.
The third-quarter report was the first for the company under its new chief executive, Bob Dudley, who replaced Tony Hayward.
"We have made good progress during the quarter," Dudley said.
"This strong operating performance shows the determination of everyone at BP to move the company forward and rebuild confidence after the terrible events of the past six months."
All the other major oil companies, except Chevron, have reported stronger third quarter profits improved thanks to higher oil and gas prices.