BP Reports Weaker Profits for the Quarter
BP the no. 4 sized oil company in the West reported that refining weakness and ongoing cost for the Gulf spill hit their profits. The refining business encountered a loss, while the company said it would increase a provision in its accounting for the oil spill of 2010 of $200 million.
Weaker margins in refining, higher exploration expenses and the accounting procedure regarding the Gulf oil spill bit into the profits said BP.
The oil behemoth said the underlying replacement hit profits, which is a measurement that takes away fluctuation in inventory values. Profit dropped during the fourth quarter to $2.8 billion, which was just marginally over the expectations of analysts. Profits for the full year dropped to $13.4 billion from $17.1 billion in 2012.
The figures also were hit by the major divestment program at BP, including exits from Pakistan, Vietnam, Venezuela and Colombia, as well as a large drop in profits downstream, where a substantial fall industry wide in refining margins was made even worse by the divesting of two large refineries in the U.S.
Underlying downstream profits for the fourth quarter dropped to $70 million in comparison to over $1.4 million in 2012.
BP was able to partly offset the impact by strong growth in production from the company’s core markets that include the North Sea, the Gulf of Mexico and Angola. This past year was also the best year for the company’s exploration drilling in nearly a decade. The company took part in 17 exploration wells that were completed.
The CEO of BP, Bob Dudley said the operating performance for BP was strong throughout all of 2013, with higher asset reliability and good delivery of projects in both the downstream and upstream businesses.
The achievements are what underpin the financial targets we have for the company in 2014 and give us the foundation for a continuation in growth and a sustainable cash flow.
Financial returns for the fourth quarter in Russia were improved, with the minority stake BP has in Rosneft the Kremlin controlled conglomerate, generating $1.1 billion in net income versus only $200 million from its prior joint venture during a similar time period in 2012.