BP posts soaring profits, expects to resume Gulf drilling

It’s still a struggle for Gulf Coast communities racked by last year’s catastrophic oil spill, but BP is flying high on its first-quarter profits and the expectation that it will resume drilling in the Gulf of Mexico again before the end of the year.

Thanks to painfully high crude oil prices, BP posted soaring net profits for the first quarter – up 17 percent from $6.08 billion in the first quarter of 2010 to $7.12 billion. The earnings were enough to offset an 11 percent decline in oil and natural gas production caused by last year’s $24 billion in asset sales, which BP carried out to pay for cleanup and damages, and a drilling moratorium in the Gulf of Mexico. The company’s output was also diminished by a temporary freeze on its operations in the North Sea and Africa over safety concerns following last year’s oil disaster.

But even more surprising than BP’s huge post-spill profits is its confidence that it will be drilling in the Gulf of Mexico again before the year is out, despite the criminal and civil charges it faces over the Deepwater Horizon blowout and resulting oil spill.

BP Chief Financial Officer Byron Grote told analysts during a conference call that BP expected to be “back and actively drilling [in the Gulf] during the second half of the year.”

“BP is in the midst of major change as we work to reset focus for the company and begin the task of rebuilding long-term sustainable value for our shareholders,” Grote said.

“We know that these developments have created uncertainty but you can be confident in our determination that any outcome we agree will be in the best interests of BP shareholders,” Grote said, addressing investor concerns that its landmark Arctic exploration deal with Russian state-owned oil company OAO Rosneft fell through.

The Bureau of Ocean Energy Management, Regulation, and Enforcement (BOEMRE), the new U.S. agency charged with regulating offshore drilling, hasn’t made it easy for BP and other oil companies to resume drilling in the Gulf since the oil spill. Before operations can resume, operators must prove that they are capable of immediately stopping a deep-sea blowout.

Since the drilling moratorium was lifted in October, BOEMRE has issued just 10 well-drilling permits. BP seeks permissions from regulators to drill 10 development wells that were underway when the Deepwater Horizon exploded and the subsequent moratorium was imposed. Although BP may be able to demonstrate its competency to U.S. regulators, allowing the company back into the Gulf for more drilling amidst the criminal charges and so much environmental damage will undoubtedly spark controversy and outrage.