BP's profit tumbles 54pc on oil spill impact
London, February 6, 2013
British energy giant BP said its net profits slumped by more than half in 2012 to hit $11.58 billion compared to $25.7 billion the year before as the company felt the impact of asset sales, writedowns and charges related to the Gulf of Mexico disaster.
BP, the last of the big four western world oil companies to report fourth quarter figures, still beat expectations because of one-off taxes related to its divestments and liability payments, and its shares rose nearly 2 per cent.
Adjusted net profit, stripping out fluctuations in the value of inventories, plunged by almost 50 per cent to $11.99 billion. The group took a pre-tax charge of $4.1 billion for the fourth quarter in relation to the oil spill disaster, taking its total clean-up bill to $42.2 billion.
The profits were hit also by divestments, including the sale of BP's 50 per cent stake in Russian joint venture TNK-BP to Russian oil producer Rosneft.
Once the world No. 2 but now the smallest of the four "oil majors" by market value, BP turned in net profit adjusted for non-operating items and accounting effects of $3.984 billion down from $4.986 billion a year earlier.
Analysts had expected a figure of $3.305 billion, but they had warned that the result was hard to predict given the changing nature of BP, and put the difference down to one-off tax effects. Before tax, underlying profit was $5.098 billion down from $7.179 billion, broadly in line with forecasts.
The company has sold $37.8 billion worth of assets since the Macondo spill and taken a total charge against profits of $42.2 billion - most of which has already been paid out in compensation and fines.
It also expects to receive $12.3 billion this year from the sale of its Russian interests to Rosneft along with a one-fifth stake in the state company.
More billions could flow out of the business this year, either via a settlement with U.S. authorities, or as a result of a civil penalties trial that is due to begin on February 25.
As a result of its trimming, BP's oil and gas output fell by 7 per cent in the quarter.
"We will continue to see the impact of this reshaping work in our reported results in 2013," said chief executive Bob Dudley. "By 2014, I expect the underlying financial momentum to be strongly evident," he added.
The oil spill, which killed 11 men and leaked 5 million barrels of crude into the sea, has had a debilitating effect on BP's share price performance, as has a long-running dispute with its former partners in Russia which casts a shadow over its prospects there.
The stock has recovered in recent weeks after the sales to Rosneft last year, and as investors start to price in closure on the spill.
However, BP shares still trade and just 8.3 times past earnings per share and 8.6 times predicted earnings per share compared with 9.3 and 9.2 times respectively on average among its big rivals Exxon Mobil, Chevron and Royal Dutch/Shell.-Reuters
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