[A-List] BP watch: more forecast revisions

["Keaney Michael" <Michael.Keaney@xxxxxx>]

Tropical storms blow BP output forecasts off course
By Michael Harrison, Business Editor
The Independent, 03 October 2002

BP unsettled the market for the second time in a month yesterday after
warning that tropical storms in the Gulf of Mexico had blown its
production forecasts off course again.

The oil giant said that it now expected output growth for the year to
"approach" 4 per cent compared with its target of 5.5 per cent. A month
ago it lowered its production growth forecast for the year to between
4.5 per cent and 5 per cent.

Analysts were also taken aback by BP's disclosure that production growth
would be measured on a reported basis - meaning that it would be able to
meet its 5.5 per cent growth target by making small acquisitions. The
market has assumed that output growth would come from BP's existing
portfolio of assets.

Shares in BP gave up their initial gains on the news to stand 1 per cent
down on the day but later recovered to close 7p higher at 442.5p.

BP said it now expected third quarter production to increase by around 4
per cent compared with its forecast of 5 per cent on 4 September. It
blamed the tropical storm Isidore in the Gulf of Mexico, which shut down
1.4 million barrels of oil production a day last week.

With Hurricane Lili about to give BP's Gulf oil rigs a fresh battering,
the company cautioned that fourth-quarter production levels could also
be affected. Other factors which could hit output included the speed
with which BP sorted out operational problems in the North Sea and the
prospect of a mild winter in the northern hemisphere.

BP indicated that production growth of 5.5 per cent was unlikely to be
achieved in 2003 or 2004. However, it insisted that it would still meet
its target of 5.5 per cent compound growth over the 2000-2005 period.

But analysts were left unconvinced. Steve Turner of Commerzbank, said:
"BP's second production forecast downgrade in a month has further eroded
the trust between investors and the company. Confidence in BP's ability
to hit its medium-term production growth target is now in doubt. At the
very least the quality of this target is being weakened by the inclusion
of acquisitions."

Tony Alves at Investec said: "BP has a 10-year track record of
delivering everything for investors. Now it looks like this perfect
track record is beginning to slip a bit."