4th Feb 2020 07:41
(Alliance News) - BP PLC on Tuesday reported a fall in fourth quarter and annual earnings amid weak oil and gas prices, as its long-standing Chief Executive Bob Dudley delivered his final results at the oil major.
However, BP's preferred profit metrics beat analyst expectations and the company also raised its annual dividend.
In the three months to December 31, underlying replacement cost profit was down 26% year-on-year to USD2.57 billion from USD3.48 billion. For the full-year, it declined 21% to USD9.99 billion from USD12.72 billion.
According to company compiled consensus from 20 analysts, 2019 RC profit was predicted to come in at USD9.50 billion and for the fourth quarter alone at USD2.10 billion.
Revenue was down 6.0% to USD71.11 billion from USD75.68 bilion in the fourth quarter, with 2019 revenue declining 6.8% to USD278.40 billion from USD298.76 billion.
BP's preferred measure of profit is replacement cost, or RC. This is defined by the company as the replacement cost of inventories sold in the period. It believes RC is useful to illustrate the fact that crude oil and product prices can vary significantly from period to period.
Akin to its rival, Royal Dutch Shell PLC, BP's earnings are at the mercy of oil prices, which experienced volatile swings in 2019, amid the uncertainty created by the US and China trade war. China is world's top importer of oil.
The company upped its fourth quarter dividend by 2.4% year-on-year to 10.5 cents.
Pretax profit was down sharply in the fourth quarter to USD249 million from USD2.39 billion. And in the full-year, it more than halved to USD8.15 billion from USD16.72 billion.
BP reported USD2.68 billion in fourth quarter impairment costs and USD6.89 billion for the whole of 2019.
"The impairment charges, which are substantially all reported in the Upstream segment, principally relate to BP's ongoing divestment programme. They include USD1.99 billion in the fourth quarter and USD4,70 billion in the year relating to heritage BPX Energy assets. USD258 million in the fourth quarter and the USD1.26 billion in the year relating to the group's interests in its Alaska business and USD244 million in the year relating to the group's interests in Gulf of Suez oil concessions in Egypt."
In 2018, BP reported full-year impairment costs of USD90 million, and in the fourth quarter of that year, it actually made a USD34 million gain.
Disposals in 2019 totalled USD9.4 billion and it expects another USD5 billion by mid-2021
"Compared with the same period in 2018, the result for the fourth quarter primarily reflects lower oil prices partially offset by duty lag benefit," BP added.
Turning to production, output for the fourth quarter rose 2.7% to 2.7 million barrels of oil equivalent per day, and for the full-year, climbed 3.8% to 2.6 million barrels of oil equivalent per day.
"We expect full-year 2020 underlying production to be lower than 2019 due to declines in lower margin gas basins. We expect reported production to be lower due to the above factor and the impact of the ongoing divestment programme," BP said.
Meanwhile, new Chief Executive Bernard Looney will assume the role on Tuesday, replacing Dudley, who was at the helm since 2010. Looney was promoted to group CEO having been head of the Upstream unit.
Dudley said: "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."
By Eric Cunha; [email protected]
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