BP Fails To Light Up As Profits Drop

By on February 5, 2014

The oil giant is feeling the pinch as it slims down its assets and margins narrow.

BP’s profits fell during the fourth quarter of 2013 and the whole year as the oil giant continued to feel the effects of its brutal slimming regime. This was because the company had to shed billions of dollars-worth of assets to pay out for the Deepwater Horizon oil spill and has now been muscled out of its Russian joint venture as well.

Underlying replacement cost profit, which excludes the effect of asset sales and oil price fluctuations, was US$13.4-billion (R149.1-billion) in 2013, compared with US$17.1-billion (R190.3-billion) the previous year.

The measure was down to $2.8-billion (R31.2-billion) in the fourth quarter compared with US$3.9-billion (R43.4-billion) in 2012, but just ahead of the US$2.7-billion (R30.1-billion) analysts estimated. BP blamed lost income from those never-to-be-seen-again assets, weaker refining margins and exploration write-offs for the drain in profits.

BP, the third-largest energy company in the world, has sold off a whopping US$38-billion (R422.9-billion) of assets since the Deepwater Horizon oil rig exploded in the Gulf of Mexico in 2010. The company said, in October, that it plans to sell a further US$10-billion (R111.3-billion) by the end of 2015, and has agreed the sale of another US$1.7-billion (R18.9-billion) to date. The provision for the spill also edged up by US$200-million (R2.2-billion) to US$42.7-billion (R475-billion) in the quarter. That’s despite a US judge having tightened the rules around claims against it relating to the spill. Ouch.

As recompense to shareholders for its hardcore asset diet, BP embarked on an US$8-billion (R89-billion) share buy-back binge last March, and said it has bought around US$6.8-billion (R75.6-billion) so far. The company’s fourth quarter dividend was also plumped up, rising 5.6 percent from 2012 to US$0.095 (R1.06) per share.

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