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From NPR News this is ALL THINGS CONSIDERED. I'm Audie Cornish. Oil giant BP reported its second-quarter finances today and the numbers were something of a surprise. The company lost $1.4 billion dollars during a three-month period. That's quite a drop from the nearly $6 billion dollars in profit the company raked in during the same period last year. As NPR's Jeff Brady reports, BP blames much of the loss on lower energy prices
JEFF BRADY, BYLINE: Oil companies have been among the most profitable corporations in recent years as prices steadily went up. World crude soared to nearly $130 a barrel this spring. But since then prices have fallen rapidly, dropping almost 30 percent. In a conference call with investors, BP's chief executive, Bob Dudley, said very low natural gas prices also hurt his company's bottom line.
BOB DUDLEY: To be profitable, this has been a particularly brutal quarter in terms of low gas prices, hitting a low of $1.94.
BRADY: That's per 1,000 cubic feet of natural gas, which is enough to supply the average U.S. home for four days. Just a few years back the price was more than five times higher. The reason for the big drop is a big boost in natural gas drilling, thanks in large part to new technologies like hydraulic fracturing, or fracking. Rocco Canonica is with Bentek Energy, a Colorado company that monitors natural gas markets.
ROCCO CANONICA: Natural gas production in the United States has grown about 30 percent from 2005 to 2011, so that's a huge increase in gas production and it's outpaced demand growth.
BRADY: It's simple economics: when there's more supply than demand, prices head down. Low prices are expected to continue for some time, so BP now says its natural gas holdings in North America are worth about $5 billion dollars less than before. BP is responding by idling drilling rigs. At the end of last year Bob Dudley says his company had 12 natural gas drilling rigs operating in North America.
DUDLEY: By the end of August we'll be down to seven and I would expect by the first of January - at these kind of prices - we'll be down to five rigs.
BRADY: On the other hand BP is expanding oil drilling in the Gulf of Mexico. It plans to have eight deepwater rigs in the gulf by year's end. Dudley says that will be the highest number ever for his company. BP still faces expenses associated with its massive 2010 oil spill in the gulf. It settled with most of the plaintiffs earlier this year. BP plans to make its final payment in coming months to a $20 billion fund set up for those affected by the spill. The company still faces federal government claims. A trial is scheduled to begin in January, though BP says it's interested in settling the case. Jeff Brady, NPR News. Transcript provided by NPR, Copyright NPR.