BP reported a 79 percent drop in fourth-quarter profit on lower production and higher costs largely due to its ongoing liability related to the Gulf of Mexico oil spill nearly three years ago. The British oil giant also said that 2013 production will be lower than 2012.
The results reported Tuesday come as the London-based company faces business and legal challenges and a renewed focus on worker safety following a deadly terrorist attack last month at a natural gas facility in Algeria that BP jointly operates. Four BP employees and five Statoil employees were among the people killed.
“BP is a company that has been tested to the utmost,” Chief Executive Bob Dudley said during a conference call with analysts and investors.
He said BP is determined to rebound and he believes the company has the foundation for long-term growth. The company also plans to continue spending lots of money to grow its business — $24 billion to $25 billion in capital expenditures are budgeted for 2013.
And BP announced a quarterly dividend of 9 cents a share, to be paid in March.
Investors appeared to be focused on the positives, including higher total revenue in the quarter. They drove BP shares up 61 cents, or 1.4 percent, to $44.22 in morning trading.
Read more: BP suspended from new federal contracts
In the short-term, however, the road continues to be bumpy.
BP said that from October to December it earned $1.62 billion, compared to a profit of $7.69 billion a year earlier.
Revenue in the quarter totaled $98.86 billion, compared to $96.34 billion a year earlier.
For all of 2012, BP reported a profit of $11.58 billion, compared to $25.70 billion in 2011. Twelve-month revenue came to $383.57 billion, compared to $386.46 billion in 2011.
BP also reported production for the quarter fell 7.1 percent to 2.29 million barrels of oil equivalent per day. Going forward, the company expects first-quarter production to be slightly higher than the fourth quarter, but production for all of 2013 is projected to be lower than 2012. The lower production is due partly to the big divestments that BP has been making, Chief Financial Officer Brian Gilvary said.
The fourth quarter results included a $4.1 billion charge relating to costs associated with the 2010 oil spill. The figure includes the company’s settlement of criminal charges that it reached with the U.S. Justice Department. Also during the fourth quarter, BP made its final payment to a $20 billion trust fund that it set up to compensate victims of the spill.
BP still faces fallout and uncertainty from the oil spill.
BP was ineligible for new contracts worth up to $1.9 billion to provide fuel to the federal government this year because of the suspension imposed over the company’s conduct in connection with the oil spill, records show. The Environmental Protection Agency suspended BP from new government contracts in November after prosecutors socked BP with criminal charges, including a Clean Water Act violation, related to the spill.
While it has resolved the criminal charges, it still is working to lift the suspension and it also faces the prospect of having to pay billions of dollars more in civil fines related to the amount of oil that spilled.
The company said Tuesday that it is in ongoing settlement talks with the Justice Department and other federal agencies about the civil fines, but it can’t be assured it will reach an agreement. A civil trial over the oil spill is scheduled to begin Feb. 25 in New Orleans.
BP said it remains prepared to settle the remaining civil claims but only on “reasonable” terms. It said it continues to prepare for trial.
As for the EPA suspension, Dudley said the company has not yet been told it will be barred from bidding during a March lease sale involving the central Gulf of Mexico.
“If we don’t, it’s OK,” Dudley said.
Dudley said BP remains the largest leaseholder in the Gulf with 700-750 leases.
“It is a lot on our plate,” he said.
In the meantime, Dudley said BP continues to focus on safety.
“Some say we are now too attentive to this,” he said.
But, Dudley said that with the emergence of a “safer and stronger BP,” the company is “clear this is good business.”
The terrorist attack in Algeria was a reminder of the challenging physical environments that oil and gas workers are exposed to around the world.
“People were murdered on what should have been an ordinary day at work, and we feel the loss deeply,” Dudley said.
Read ongoing FuelFix coverage of the BP’s legal woes stemming from the Gulf of Mexico oil spill:
Guilty: BP admits to causing deaths in spill disaster (Jan. 29)
Some parties appeal spill settlement ruling (Jan. 25)
BP, Justice Department say Gulf plea deal fair and appropriate (Jan. 16)
Judge gets sentence recommendation for BP (Jan. 14)
Rig victim’s widow says Gulf disaster caused ‘inferno of grief’ (Jan. 11)
Transocean to pay government $1.4B to settle fed’s spill claims (Jan. 3)
Government accuses BP of being evasive on Gulf spill flow rate (Dec. 28)
Judge approves BP class action settlement (Dec. 21)