BP earnings are lowest in two years

Oil giant BP on Tuesday reported its lowest profit in two years because of falling energy prices and declining production, and it said output would probably drop again in 2007.

Fourth-quarter net income declined 22% to $2.88 billion, or 15 cents a share, from $3.69 billion, or 18 cents, a year earlier, London-based BP said. Its U.S.-traded shares fell 54 cents to $63.25 as the company said further delays at the Atlantis and Thunder Horse rigs in the Gulf of Mexico would crimp output this year and next.

The drop in production was the first since Chief Executive Lord John Browne spent $100 billion buying Chicago-based Amoco Corp. in 1998 and Los Angeles-based Atlantic Richfield Co. in 2000 and was caused by lost output from Alaska and delays at the two gulf rigs.

Its profit also was lower than at BP’s bigger competitors, Royal Dutch Shell and Exxon Mobil Corp.

Last month, Browne said he would retire more than a year ahead of schedule. A panel investigating the March 2005 blast at a Texas plant that killed 15 people said last month that he had failed to provide the leadership needed to keep the company’s U.S. refineries safe.

Tony Hayward, BP’s former head of exploration and production, will replace Browne on Aug. 1.

Excluding changes in the value of oil inventories, profit matched analyst estimates. Based on this measure, quarterly profit fell 12% to $3.895 billion, in line with the $3.89 billion predicted in a Bloomberg survey of nine analysts. The company refers to that measure as replacement cost profit. BP’s profit figures included a net nonoperating charge of $152 million.

For the entire year, BP’s earnings rose 15% to $22.3 billion because of higher energy prices in 2006 compared with 2005.