LONDON: BP said Tuesday that production declined for a sixth quarter because of delays in starting new fields in the Gulf of Mexico and pipeline leaks that shut down supplies from Alaska.
Fourth-quarter output fell 5 percent to 3.82 million barrels of oil equivalent per day from 4.02 million barrels a year earlier, and refining profitability also dropped, BP, which is based in London, said Tuesday. Shares of BP, the second- largest oil company in Europe after Royal Dutch Shell, slid to their lowest price since May 2005 after supply missed analyst forecasts at UBS and Citigroup.
"The market is disappointed by the production side," said Alan Beaney of Principal Investment Management in Sevenoaks, England.
The reputation of the BP chief executive, John Browne, has been battered by criticism over refinery safety and by pipeline leaks and corrosion that forced BP to slow pumping from Prudhoe Bay, the largest U.S. oil field, during the second half of 2006. The Prudhoe slowdown contributed to BP's first yearly decline in production since it completed its acquisitions of Amoco and Atlantic Richfield at the start of the decade.
BP has also delayed the start-up of two Gulf of Mexico platforms, Atlantis and Thunder Horse, until the second halves of 2007 and 2008, respectively, because of problems with equipment.
BP stock fell 17 pence, or 3.1 percent, to close at 535.5 pence, or $10.39, in London, the biggest drop since June 8, when the company said a U.S. grand jury would investigate the Alaskan oil spills. The decline also came as crude oil in New York plunged to its lowest price since 2005.
Shares of BP sank 8.3 percent last year, their worst performance since 2002, compared with a 0.8 percent gain at Shell.
"Credibility for the company is beginning to go," said Stephen Pope at Cantor Fitzgerald in London. "It might be a very brave call to go and take a position" in the stock right now.
The provisional fourth-quarter figure puts BP's overall 2006 production at 3.92 million barrels of oil equivalent per day in oil and natural gas, down 2.3 percent from 2005, and missing the company's original goal of between 4.1 million and 4.2 million barrels a day.
BP's global output growth surged 10.8 percent in 2004, aided by new supply from its Russian venture, TNK-BP, then slowed to 0.4 percent the next year, when it was hurt by hurricanes in the Gulf of Mexico. The last time production rose from year-earlier levels was in the second quarter of 2005.
"BP has been too optimistic" on how much it can extract from maturing fields, a Citigroup analyst, Jonathan Wright, said in a note Tuesday.