BP shares tumble as profits disappoint

Oil major BP saw its shares fall in early trading on disappointing second quarter earnings and an 11% drop in production.

Replacement cost profit of $5.3bn in Q2, compared with a loss of $17.2bn a year earlier stemmed from a pre-tax charge of $32bn to cover costs relating to the Gulf of Mexico disaster. The market had predicted profits of $6bn for the oil giant.

Total oil and gas production declined by 11% following the suspension of drilling in the Gulf of Mexico.

Output has also been hit as the oil major sold $25bn of assets to help foot the bill for the disaster.

However, the company was buoyed by higher oil prices which offset reduced production. Political unrest in crude-producing Middle Eastern and North African countries helped drive the oil price higher.

Total revenue for the quarter was up 39% to $103.84bn from $75.87bn in the same period in 2010.

BP's share price tumbled this morning, trading 2.29% or 11 points lower to 464p.