BP Expects to Resume Gulf of Mexico Oil Drilling in Second Half

BP CEO Robert Dudley
Robert " Bob" Dudley, chief executive officer of BP Plc, pauses during the company's press conference to announce full-year results in London on Feb. 1, 2011. Photographer: Simon Dawson/Bloomberg

BP Plc expects to resume drilling in the Gulf of Mexico in the second half, more than a year after the Macondo well blowout that caused the worst U.S. spill, Chief Financial Officer Byron Grote said.

BP has applied for permits with the U.S. authorities, Grote told analysts today on a conference call. Production from the Gulf of Mexico in the first quarter was down by about 100,000 barrels of oil equivalent a day from a year earlier, a loss that was partly offset by higher oil prices, he said.

The return to Gulf drilling will bolster BP after a drop in output led to lower profit in the first three months of the year. While Exxon Mobil Corp., Royal Dutch Shell Plc and Chevron Corp. restarted some operations last month, BP has yet to receive permission to resume since President Barack Obama lifted the moratorium on deepwater drilling in the region that provides BP with some of its highest margins.

BP spent about $100 million in the first quarter in rig standby costs in the Gulf of Mexico, Grote said. Global oil and gas production slipped 11 percent in the period on the Gulf drilling ban and the sale of $24 billion in assets worldwide, the company said.

BP took an additional $400 million charge for spill costs, bringing the total provisions to more than $41 billion. Excluding one-time items and inventory changes, earnings fell to $5.37 billion from $5.6 billion a year earlier. BP was expected to earn $5.6 billion on this basis, according to the mean estimate of seven analysts surveyed by Bloomberg.

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