Tuesday, August 10, 1999 Published at 11:47 GMT 12:47 UK
Business: The Company File
BP Amoco reports gushing profits
Savings have surpassed hopes at the time of the merger
BP Amoco has become the latest oil giant to report a sharp rise in profits.
The global company unveiled a 13.6% increase in underlying second quarter profits as cost savings from its mega-merger came through quicker than planned.
"We have almost achieved the projected annual run rate of $2bn in merger benefits, significantly earlier than previously indicated," said chief executive John Browne in the results statement.
The group reported underlying second quarter profits of $1.226bn, compared with $1.08bn in the same period last year.
This was above analyst expectations, and shares had risen 21p to 1244p by 1110 GMT.
BP Amoco, which completed its merger at the start of the year, said the second quarter result was the best since the end of 1997 - when a global financial crisis dented profits.
Improved refining outlook
Exploration and production profits rose 54% while those for refining and marketing fell by 29%.
It said refining margins were not likely to show a marked improvement, although the outlook for the group as a whole was better.
It is now a year since BP stunned the industry by announcing its $55bn takeover of US firm Amoco, a move that launched a new era of consolidation in an industry hit hard at that time by weak oil prices.
Since then BP Amoco's target for annual merger cost savings has been doubled to $4bn by 2001.
BP Amoco's second quarter results compare favourably with its major rivals. Weak refining margins cut Exxon's second quarter net profit by 25%, while Royal Dutch/Shell managed a 5% earnings rise.
Average oil prices during the quarter were $14.49 per barrel, against $12.13 in the same quarter last year. Overall oil production was also up 2% in the quarter.
BP Amoco is set to approve the takeover of another North American oil group Arco in September.
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