BP Profits Drop in Q1

BP Profits Drop in Q1

LONDON -- BP (IW 500/40) net profits plunged in the first quarter compared with the outcome a year ago when the group sold its stake in a Russian joint venture, the British energy giant said on Tuesday.

Underlying earnings were hit also by a one-off loss related to the group's shale energy interests, while the firm also experienced falling revenues and lower oil production.

Net profit stood at $3.528 billion in the first three months of 2014 compared with profit after tax of $16.863 billion in the first quarter one year earlier.

BP -- still seeking to reposition itself after the Gulf of Mexico oil spill disaster in 2010 which has cost it tens of billions of dollars in compensation and fines -- has since sold its 50% stake in joint venture TNK-BP to Rosneft.

This in turn has given BP a near 20% holding in the Russian energy company.

"First quarter 2013 included a $12.5-billion gain relating to the disposal of our interest in TNK-BP," the British company said, explaining the main reason for the heavy fall to net profit.

The results were published one day after Washington imposed sanctions against Rosneft chief executive Igor Sechin.

But BP had insisted on Monday that it remained committed to Rosneft, despite Sechin being named on a new list of seven senior officials facing punitive measures over President Vladimir Putin's stance on Ukraine.

BP's first-quarter performance was meanwhile affected also by a $521-million write-off relating to its decision not to develop the Utica shale energy acreage in the United States.

Stripping out the one-off gains and losses, as well as changes to the value of its oil and gas inventories, BP said that profit after tax dropped to $3.225 billion in the first quarter -- which was also lower compared with market expectations.

Production fell 8.5% to 2.13 million barrels of oil and gas per day in the reporting period, while total revenue dipped to $91.71 billion from $94.11 billion.

BP warned that output would fall further in the second quarter owing to planned maintenance on facilities in the North Sea and Gulf of Mexico.

BP Raises Dividend

Investors set aside news of tumbling profits to cheer BP's increase in the group's shareholder dividend to 9.75 cents a share in the first quarter from 9.0 cents a year ago.

BP added that it was nearing completion of its current $8.0-billon share buyback program, with $7.6 billion so far spent on repurchasing shares.

And it said that it would use some of the proceeds from further asset sales for more share buybacks.

"Putting their Russian and US woes to one side, investors are focusing on the positives -- and the 8.0-percent year-on-year dividend increase with promise of share buybacks is proving to be just the tonic," said analyst Mike McCudden at Interactive Investor.

BP shares rose 0.77% to stand at 492.10 pence in early afternoon deals on London's FTSE 100 index of top companies, which was up 0.73% at 6,749.22 points.

The company remains blighted by the huge financial fallout resulting from the devastating blast on the BP-leased Deepwater Horizon drilling rig on April 20, 2010, which killed 11 people and unleashed about 4.9 million barrels of oil into the Gulf.

"The total cumulative net charge for the Gulf of Mexico oil spill remains at $42.7 billion," BP said on Tuesday.

- Ben Perry, AFP

Copyright Agence France-Presse, 2014

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