BP profit down in fourth quarter

February 4, 2014

BP Plc (BP/), Europe’s second-largest oil company, said fourth-quarter profit fell from a year earlier as output declined and refining margins weakened, Bloomberg reported on February 4.
Profit adjusted for one-time items and inventory changes dropped to $2.8 billion from $3.9 billion a year earlier, the London-based company said in a statement. That matched the average estimate of 12 analysts surveyed by Bloomberg.

BP follows Royal Dutch Shell Plc (RDSA) and Exxon Mobil Corp., the two biggest oil companies by market value, in reporting lower profit as the cost of extracting crude rises and oil prices stagnate. Chief Executive Officer Bob Dudley has promised to focus on BP’s most profitable fields so the company’s cash flow is 50 percent higher this year than 2011.

Production in the quarter, excluding Russia, fell 1.9 percent to 2.25 million barrels of oil equivalent a day. Adjusting for disposals and excluding Russia, underlying output rose 3.7 percent. BP said it expects underlying output to rise this year, though reported production will drop because of divestments and the loss of about 140,000 barrels a day from the expiration of its concession in Abu Dhabi.

Brent crude prices averaged $109.35 a barrel in the fourth quarter, 0.7 percent lower than a year earlier, while BP’s refining marker margin, a generic measure of the profitability of processing oil, dropped to $11 a barrel from $18.17 in the last three months of 2012.

BP has gained 4.8 percent since Oct. 29, when it announced third-quarter results that beat analyst estimates and unexpectedly raised the dividend. It completed a $38 billion asset-sale program ahead of schedule to shore up the balance sheet after the 2010 Gulf of Mexico oil spill.

The company will sell a further $10 billion of assets by the end of 2015 and give most of the proceeds to shareholders, favoring buybacks, it said in October. BP has bought back about $6.8 billion of shares in the $8 billion program funded by a deal in which it sold its half of Russian venture TNK-BP and took a 20 percent stake in OAO Rosneft, the country’s biggest oil producer.

Copyright: Bloomberg, 2014