BP Plc, the world's number-two oil firm by market value, said on Tuesday its second-quarter production rose 3.5 percent compared to the same period last year, faster than some analysts had expected. The London-based oil giant added in its quarterly trading statement that it was on track to meet its 2005 production goal of 4.1 to 4.2 million barrels of oil equivalent per day (boepd).
However, higher charges, reported due to new accounting rules, spooked some dealers.
Overall production, which varies seasonally, was around 4.11 million boepd, compared to 3.97 million boepd in the second quarter of 2004, a rise of 3.5 percent.
Analysts at Citigroup had predicted a rise of only 1.4 percent, while others had said BP would not move toward its target range before the fourth quarter, when a number of big projects are expected to come on line.
BP's shares were up 0.3 percent at 619 pence at 0825 GMT.
BP said oil and gas realisations, its actual receipts from fuel sales, rose in line with benchmarks, suggesting the firm is capturing the upside of oil prices, which broke through the $60 a barrel level for the first time in the second quarter.
"Things are going well for the whole sector, with firms benefiting from great prices. It would have been a surprise if the statement contained anything cautious," said Yoon-Chou Chong, head of pan-European equities at Aberdeen Asset Management.
BP's trading update follows upbeat operational comments from US rivals Unocal and ConocoPhillips last week, and points to another quarter of bumper earnings for Europe's biggest company and industry peers.
Oil companies had predicted new accounting rules that came into effect in January would add to earnings volatility and this was again shown as BP reported a $500 million charge related to embedded derivatives. A spokesman said this was a "purely technical" accounting matter and did not reflect losses on speculative trading. All contracts, including hedges, must be valued at market prices under the new rules.
The spokesman said an expected significant drop in results at BP's gas power and renewables business, compared to the first quarter, was largely due to the accounting treatment of gas stocks.
BP continues to benefit from high refining margins, although a narrowing in the discount refiners pay for heavy or sour crude, compared to benchmark, lighter crudes, has eroded gains.
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