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BP Profits Down by Half Due to US Oil Spill Fallout

Feb. 5, 2013
The company took a pre-tax charge of $4.1 billion for the fourth quarter in relation to the Gulf of Mexico disaster, taking its total clean-up bill to $42.2 billion.

LONDON -- BP (IW 1000/4) said Tuesday that net profits slumped by more than half in 2012, as the group was rocked by fines and asset sales linked to the 2010 Gulf of Mexico oil spill disaster, ahead of a US trial later this month.

Earnings after taxation tumbled 54% to $11.582 billion, compared with $25.7 billion in 2011, BP said.

Adjusted net profit, stripping out fluctuations in the value of inventories, plunged by almost 50% to $11.993 billion.

The company took a pre-tax charge of $4.1 billion for the fourth quarter in relation to the Gulf of Mexico disaster, taking its total clean-up bill to $42.2 billion.

Profits were also hit by divestments, including the sale of BP's 50% stake in the troubled Russian joint venture TNK-BP to the main Russian oil producer Rosneft.

BP added it was still assessing the impact of the deadly attack at its joint venture in the In Amenas gas site in Algeria last month, but remained committed to the country.

The energy major also revealed it had reached its target to sell $38 billion of assets a year earlier than originally planned, as it sought to meet the bill for the oil spill costs.

However, the sell-offs pushed annual production lower. Output sank more than 5% to 2.319 million barrels of oil equivalent per day, excluding TNK-BP's output.

The results were issued one week after a U.S. judge approved a $4.5-billion deal in which BP pleaded guilty to criminal charges from the 2010 oil spill. The devastating blast on the BP-leased Deepwater Horizon drilling rig on April 20, 2010 killed 11 people and unleashed some 4.9 million barrels of oil into the Gulf.

Later this month, BP will face a mammoth trial consolidating scores of remaining lawsuits stemming from the worst environmental disaster to strike the United States.

It must also still resolve a civil case on environmental fines which could amount to as much as $18 billion if gross negligence is found. BP also remains on the hook for billions in economic damages, including the cost of environmental rehabilitation.

Despite plunging profits, chief executive Bob Dudley argued that the group was well positioned for long-term growth.

"We have moved past many milestones in 2012, repositioning BP through divestments and bringing on new projects. This lays a solid foundation for growth into the long term," said Dudley in Tuesday's earnings release.

"Moving through 2013 we will deliver further operational milestones and remain on track for delivery of our ten-point strategic plan, including our target for operating cash flow growth, by 2014."

The results were also published three weeks after a fatal Islamist attack on the BP-operated In Amenas gas plant, in a hostage-taking siege that ended with the deaths of almost 40 captives, mostly foreigners.

"We are working with our partners to assess the impact of the incident and intend to resume activities when it is safe to do so," the company added on Tuesday.

"BP remains committed to operating in Algeria, where we have high-quality assets and have been present for over 60 years." The In Amenas gas field is a joint venture between BP, Norwegian group Statoil and Algerian state-owned oil firm Sonatrach.

Copyright Agence France-Presse, 2013

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