5th Feb 2008 07:01
BP PLC05 February 2008 February 5, 2008 BP DELIVERS DIVIDEND BOOST AND AGAIN REPLACES OIL AND GAS RESERVES BY MORE THAN 100 PER CENT BP today announced an increase of 25 per cent in its quarterly dividend, takingit to a level 31 per cent higher than a year ago. Chief Executive Tony Haywardsaid the rise reflected the company's increasingly robust view of the future andgreater confidence in its ability to deliver sustained dividend income toshareholders. The move also marks a shift in the balance between dividends and buybacks as ameans of returning value to shareholders. BP said the repurchase of its ownstock over the past eight years had shrunk its equity base by some 16 per cent,making a higher dividend more affordable. Hayward said the company wouldcontinue to buy back its shares, as appropriate. BP again replenished its oil and gas reserves by more than its annualproduction, the 14th consecutive year it has reported reserves replacement inexcess of 100 per cent, excluding acquisitions and divestments, a track recorddescribed by Hayward as "among the very best in our industry". The company saidit had also lifted its crude price assumption from $40 to some $60 a barrel forplanning purposes but would continue to benchmark projects to be robust at lowerprices. BP reported replacement cost profits, excluding non-operating items, of some $4billion for the final quarter of 2007, a fall of one per cent on thecorresponding quarter of 2006, bringing results for the year as a whole to $17.6billion. "Although our fourth-quarter profits were very disappointing in refining andmarketing in particular, we made good, step-by-step progress in bringing new oiland gas fields on stream and rebuilding refining capacity during the period,"Hayward said. "Output is now ramping up from those fields and refineries and we anticipatethat will feed through to the bottom line in the course of the year. We expectBP's overall oil and gas production to grow in 2008, although our exact netvolumes will depend on how the crude price affects entitlements fromproduction-sharing agreements." To support growth, Hayward said Group capital spending was expected to increasefrom some $19 billion in 2007 to between $21 billion and $22 billion this yearand, assuming a $60 price per barrel going forward, BP production would be overfour million barrels of oil equivalent a day in 2009, rising to some 4.3 millionbarrels a day in 2012. Reporting on the measures announced in October to cut BP's costs by slimmingmanagement and infrastructure and strengthtening central control of spending, hesaid he was now confident of reducing corporate overheads by 15 - 20 per cent. "The steps we have already initiated will cut BP's headcount by some 5,000 bythe middle of next year. This is in addition to the 9,500 jobs that will moveoff the payroll as a result of franchising our US convenience retail business." He said that resulting restructuring costs were some $350 million in the fourthquarter of last year and expected to total around a further $1 billion in 2008,with material benefits feeding through in 2009. Hayward described the competitive financial performance of refining andmarketing as "very poor - despite the fact that we have a strong set of assets.The principal reason is poor reliability in some of our US refineries, which iscompounded by the complexity and overhead structure of the business segment. "But there is far more to do than merely restoring US refining reliability. Weare absolutely determined to transform our downstream business as a whole. Itwill not happen overnight, but we believe that the performance gap with ourcompetitors can be progressively narrowed in the next few years." Hayward said operations had made steady progress in the fourth quarter, with thestart-up of six new exploration and production projects adding an extra 250,000barrels a day to BP's output of oil and gas. Refining capacity recovered to300,000 barrels a day at Whiting and Texas City is on track to restore most ofits economic capability by mid-year. Hayward said BP's upstream business had secured access to major new sources ofoil and gas in Oman, Libya and Canada, underpinning confidence in future growth. Further information: BP Press Office London, tel: +44 (0)207 496 4076 - ENDS - This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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