British oil company BP said quarterly profit went down a fifth from a year ago, after it sold assets in preparation for what could be its biggest oil spill payout when the case comes to trial later this month.
BP's profits down as oil spill trial looms
British oil company BP announced quarterly profit went down a fifth from a year ago, after it sold assets in preparation for what could be its biggest oil spill payout when the case comes to trial later this month.
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.
Once the world' second biggest 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 US$3.984 billion down from $4.986bn a year earlier.
Analysts had expected a figure of $3.305bn, 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 $5.098bn down from $7.179bn, broadly in line with forecasts.
The company has sold $37.8bn worth of assets since the Macondo spill and taken a total charge against profits of $42.2bn – most of which has already been paid out in compensation and fines. It also expects to receive $12.3bn 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 US 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 the BP chief executive Bob Dudley. "By 2014, I expect the underlying financial momentum to be strongly evident."
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.
BP expects four new major upstream projects to begin production by the end of 2013 – Angola LNG, North Rankin 2 in Australia, Na Kika 3 in the Gulf of Mexico and the Chirag oil project in Azerbaijan.
A further six major projects are expected to come onstream through 2014. In addition, the major upgrade of the Whiting refinery in Indiana is expected to come online in the second half of 2013, BP said.