Estimate Cuts Sting BP

Shares are down more than 5% in the last two sessions.
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Shares of oil giant


(BP) - Get Report

have fallen more than 5% in the last two sessions after Merrill Lynch and Credit Suisse slashed their fourth-quarter earnings estimates for the company.

Both firms cut their projections for BP by about 25% on a combination of higher expenses, increased taxes and lower margins.

The moves were inspired by news that has recently trickled out from BP's investor relations department, including a weekly report on regular trading conditions published on the company's Web site. BP has not provided its own earnings guidance for the quarter.

Merrill Lynch analyst Mark Iannotti wrote in a research note that $400 million in commissioning costs for four new oil and gas fields, along with additional expenses required to restart production in the U.K., Alaska, the North Sea and Azerbaijan, prompted him to cut his targets.

Unexpected tax charges of $250 million in the fourth quarter from BP's operations in Alaska also contributed to the reduction.

BP's overall refining margins fell to 5.68% from 8.05% in the fourth quarter, further reducing the company's expected profits. BP will report its official earnings for the fourth quarter on Feb. 5.

Shares of BP were recently down 0.6% at $71.35.