BP doubled its pre-tax profit for the same period in 2012 as Norway delivers the company a second rebuke in two years
BP made a record pre-tax profit in the first quarter of double its $9bn for the same period in 2012, the company announced on Tuesday, as a Norwegian regulator rebuked the company for a 2012 oil spill in the North Sea.
The company’s pre-tax profit was nearly $20bn in the first quarter of 2013 on a turnover of $107bn.
BP was censured on Monday by Norway’s Petroleum Safety Authority after a leak at a major North Sea platform. The watchdog accused BP of poor maintenance and “serious breaches of regulations”. The criticism is another blot on the company’s safety record and is the second such censure in the last two years.
About $25bn of the $42bn the company set aside to pay for the damages caused by its 2010 oil spill in the Gulf of Mexico has now been paid out. But the company is in the process of appealing a civil action brought against it in the US, that could cost more than $8bn out of the trust fund set up for the purpose of paying for the spill, the worst offshore oil spill in US history.
The first quarter profit was the highest for any three-month period in BP’s history but was boosted by about $12.5bn in cash for the sale of its stake in TNK-BP to Rosneft, the Russian oil and gas company. The proceeds of the sale are largely to be used for share buybacks, of which more than $800m worth of shares have already been purchased, out of an allocated $8bn.
The company paid nearly $2.8bn in tax for the first quarter, ending March 31 2013. It declared a dividend of 9 US cents per share, to be paid in June. Last year’s dividend was 33 cents for the full year, up from 28 cents in 2011.
Shares in the company rose by just over 3%, or about 15p, to 472p immediately after the news.
Bob Dudley, chief executive, said: ” These results represent a strong start to 2013 across all of our businesses … these strong first quarter results demonstrate the progress BP is making in delivering the performance milestones that support our 10-point plan and underpin our commitment to material operating cash flow growth by 2014. The early completion of the sale of our interest in TNK-BP has also allowed us to begin a share buy-back programme which we expect to return up to $8bn to our shareholders and reflects the reduction in BP’s asset base following our divestment programme over the past three years.”
The results, announced on Tuesday morning, were also a strong improvement on the fourth quarter of 2012, when the oil and gas giant reported pre-tax profits of $3.8bn on turnover of $100bn.
BP said its underlying replacement cost profit – its preferred measure because it removes one-off items such as charges, costs and gains – was $4.2bn for the quarter, compared to $4.7bn for the same period last year and $3.9bn for the last quarter of 2012. Analysts had been forecasting underlying replacement cost profit of $3.27bn.
BP said its performance had improved in part because its production was now skewed towards lighter sweeter oils such as those from the North Sea and Africa, which are worth more and also helped boost its profits.
Underlying production of oil and gas was up 2% on the same period last year and up 4% on the previous quarter.
Operating cash flow was $4bn for the first quarter of 2013, up from $3.4bn for the previous quarter. The company said its gearing was down to about 12%.