Discontinued operations results were a loss of $2.2 million in the third quarter 2012, compared to income of $58.8 million in the third quarter 2011. Beginning in the third quarter 2012, the results of operations for the U.K. E&P operations have been reported as discontinued operations due to the anticipated sale of this business in the coming months. The 2011 results for these U.K. operations have been reclassified to conform to this presentation. Discontinued operations in 2011 included a loss of $11.6 million for the U.K. E&P operations and income of $70.4 million related to the two U.S. refineries sold in late 2011. The U.S. refining income from discontinued operations in 2011 included a net gain on sale of $16.9 million. Discontinued operations in both years included tax charges for enacted tax rate changes in the U.K.; these tax charges totaled $5.5 million in 2012 and $14.5 million in 2011.
First Nine Months 2012 vs. First Nine Months 2011
Exploration and Production (E&P)The Company’s E&P continuing operations earned $760.0 million in the first nine months of 2012 compared to $758.8 million in the same period of 2011. The year-to-date 2012 earnings were essentially flat with the prior year as higher crude oil and natural gas sales volumes, higher sales prices for oil and Sarawak natural gas and lower exploration expenses in the current period were mostly offset by lower North American natural gas prices, higher production and depreciation expenses, and prior year income items that did not recur. These 2011 income items included $25.6 million of income tax benefits in Malaysia and a $13.1 million after-tax gain on sale of gas storage assets in Spain. Production and depreciation expenses rose in 2012 primarily due to higher production levels in the Eagle Ford Shale and at the Kikeh field. Total exploration expense was $243.7 million in 2012, down from $303.8 million in 2011. The prior year had higher costs associated with unsuccessful wildcat drilling in Indonesia, Suriname and Brunei, plus higher geophysical and lease amortization costs for licenses in the Kurdistan region of Iraq. These were partially offset by higher dry hole costs in 2012 in the Gulf of Mexico, Malaysia and the Kurdistan region of Iraq.
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