BP Profit Slips

BP said its underlying replacement cost profit for the fourth quarter was $2.8 billion, compared with $3.9 billion for the fourth quarter of 2012. Full-year underlying replacement cost profit was $13.4 billion for 2013, compared with $17.1 billion for 2012.

Compared with the same periods in 2012, both the fourth quarter and full year 2013 underlying results were affected by: the significant impact of BP’s major divestment programme; weaker refining margins; and higher depreciation and exploration write-offs as the group brought new projects online and increased its investment in exploration.

The impacts of these were partially offset by strong growth in underlying oil and gas production, particularly from key regions such as the North Sea, Angola and Gulf of Mexico. The fourth quarter’s result also benefitted from higher earnings from Rosneft than reported from TNK-BP in the fourth quarter of 2012.

Bob Dudley, BP Group Chief Executive, said: “BP delivered strong operating performance throughout 2013, with increased asset reliability and major project delivery in both our Upstream and Downstream businesses. These achievements underpin our financial targets for 2014 and lay the foundation for continued growth in sustainable free cash flow.”

Operating cash flow was $5.4 billion in the fourth quarter and $21.1 billion over the whole year. BP announced a dividend for the fourth quarter of 9.5 cents per share, to be paid in March, 5.6% higher than the fourth quarter dividend last year.

In March 2013 BP announced an $8 billion share buy-back programme and, as of January 31 2014, has spent around $6.8 billion repurchasing BP shares for cancellation. At the end of the year, BP’s net debt ratio, or gearing, was 16.2%, within the target range of 10-20%.

Organic capital expenditure in 2013 was $24.6 billion, in line with guidance. Organic capital expenditure is expected to be $24–$25 billion in 2014 and to remain in the $24–$27 billion range through to the end of the decade.

Following the completion of its $38 billion divestment programme, BP announced in October 2013 that it expects to divest a further $10 billion of assets by the end of 2015 and to use the post-tax proceeds predominantly for additional distributions, with a bias to share buybacks. To date, it has agreed around $1.7 billion of such further divestments.

Dudley said: “Capital discipline is central to BP’s strategy; making the right investment choices, sticking to our capital limits, and actively managing our portfolio in pursuit of long-term value.”

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LNG World News Staff, February 4, 2014