BP P.L.C. (BP) Reports Better Than Expected Earnings, Boosts Dividend
ADR Shares of London, England based BP P.L.C. (BP: Charts, News) formerly known as British Petroleum declined by -0.27 or -0.58% to $46.60 per share on Tuesday after the company reported fourth quarter net income had increased to $7.65 billion, versus $5.67 billion for the same period one year ago.
The results for the fourth quarter excluding out one-offs came to $4.99 billion, edging the analyst consensus for profits of $4.89 billion. The Q4 profit prompted the company to increase its dividend by 14 percent, to 8 cents per share. BP P.L.C.'s Q4 earnings were replacement cost profits, an accounting method closely watched by industry insiders and a common method used in the petroleum business. Replacement cost accounting determines a company's cost of goods sold based on the current price of oil, versus the price of oil at the time the oil reserves were found. The original cost for goods is then deducted from the company's revenue to ascertain profits. Daily Chart
Using this same measure of replacement cost accounting, BP's total 2011 profit came to $23.9 billion, versus a loss of -$4.9 billion for fiscal year 2010. The loss in 2010 was mostly attributed to costs for funding the cleanup and liability costs related to the Deepwater Horizon oil disaster in the Gulf of Mexico, which occurred on April 20th of 2010. Fourth quarter profits for 2011 included a $4 billion pre-tax settlement during the period that was paid to BP by Andarko Petroleum, (APC
). Andarko paid the settlement for their liability in the Gulf Oil Spill accident. In addition, Cameron International (CAM
), also settled with BP for $3.7 billion in the fourth quarter of 2011 to cover their involvement in the disaster. The three companies, BP P.L.C., Cameron International and Andarko Petroleum were partners in the fateful Deepwater Horizon oil spill in 2010. The disaster turned out to be the largest oil spill in history and was caused by a deadly explosion of a deep sea oil rig, which released more than five million barrels of oil into the waters of the Gulf of Mexico off the coast of New Orleans. The well was finally capped on July 15th, after four months of releasing oil into the Gulf. Litigation related to the catastrophe is set to begin in New Orleans, LA on February 27th. Despite the lawsuit, BP P.L.C.'s Chief Executive Bob Dudley stated that BP was prepared to settle the lawsuit on "fair and reasonable terms" and expressed optimism about BP's future, stating that, "2012 will be a year of increasing investment and milestones as we build on the foundations laid last year. As we move through 2013 and 2014, we expect financial momentum will build as we complete payments into the Gulf of Mexico Trust Fund, restore high-value production and bring new projects on stream." BP P.L.C. also added it would end payments a year early, into the $20 billion fund the company established to compensate U.S. citizens adversely affected by the disaster, after having received contributions from its partners, Andarko and Cameron International. Investors and traders will be keeping a keen eye on developments in the litigation later this month for future indications on the price of BP P.L.C. stock. Other News About BP BP Announces Plan to Sell its Global LPG Bottles and Tank Filling Business
Latest press release from the BP website. BP plc To Make $1m Donation
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Published on Feb 8, 2012
By Jay Hawk