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BP sees fourth-quarter profits fall but raises dividend

By Amanda Cooper

Company warns that coronavirus could slash oil price

London-listed oil and gas major BP saw profits slide by 25 per cent in the final quarter of 2019, as crude prices remained volatile, but still announced an increase in dividend payments on the eve of the departure of chief executive Bob Dudley.

The company also warned that the oil price would slide due to coronavirus. BP chief financial officer Brian Gilvary.told Reuters the epidemic would cut global oil demand by up to 500,000 barrels per day, or 0.5 per cent, this year.

Underlying replacement cost profit - BP’s definition of net income - for the fourth quarter was $2.6 billion (€2.35 billion, £1.99 billion), compared with $3.5 billion in the same quarter the previous year. However, BP still beat analyst expectations for a reading of $2.1 billion and this was above the third quarter’s $2.3 billion.

Nonetheless, the company announced it would increase its dividend payment by 2.4 percent to 10.5 cents per share. Operating cash flow for the quarter, excluding Gulf of Mexico-related payments rose to $7.6 billion, from $7.1 billion in the fourth quarter of 2018 and up from $6.5 billion in the third quarter.

Investors cheered the news, pushing shares in BP up by as much as 5 per cent on the FTSE 100.

Outgoing CEO Dudley, who hands over the reins of the company to Bernard Looney, currently head of BP’s upstream division, after a decade at the helm, praised the company’s performance.

“BP is performing well, with safe and reliable operations, continued strategic progress and strong cash delivery. This all supports our commitment to growing distributions to shareholders over the long term and the dividend rise we announced today,” Dudley said in a statement.

For the whole of 2019, BP reported profits of $10 billion, down 21 per cent from 2018’s $12.7 billion, “largely reflecting the weaker environment.”

The end of 2019 proved tough for most of the oil and gas majors. Rival Royal Dutch Shell last week saw profits halve in the final three months of 2019, while US peers Exxon and Chevron last week both missed expectations and cited a difficult environment.

BP said it expected payments relating to its Gulf of Mexico oil spill in 2010 to drop below $1 billion in 2020, from $2.4 billion for the whole of 2019.

The oil price rose by nearly 12 percent in the final three months of the year, boosted by optimism over a potential truce in the ongoing trade dispute between the United States and China.

However, the average crude price in the fourth quarter was around $61.40 a barrel, compared with around $67 a barrel in the final three months of 2018.

Denting BP’s bottom line in the fourth quarter somewhat were nearly $3 billion in charges relating to the disposal of some of its US gas assets and the reclassification of foreign exchange-related losses stemming from its biofuels arm.

BP said upstream production excluding that from its partnership with Russian producer Rosneft would likely be less than the 2.6 million barrels per day registered in 2019.

FURTHER READING: Shell Q4 profits drop by almost half

https://currency.com/news/2020/01/30/shell-sees-profits-halve-in-q4

FURTHER READING: Lower oil and gas prices hit Exxon and Chevron hard

https://currency.com/news/2019/11/01/lower-oil-and-gas-prices-hit-exxon-and-chevron-hard

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