News Column

BP's Deepwater Horizon bill rises $200m as profits fall

February 5, 2014

Terry Macalister, theguardian.com

BP has been forced to set aside a further $200m for the Gulf of Mexico oil spill, bringing the bill so far to $42.7bn . The final figure could be far higher, however, as the latest tally does not take account of additional provisions for economic loss claims from a further legal settlement it has made, the group said. BP is also waiting for a final US court decision over whether it was considered grossly negligent for the Deepwater Horizon accident. That could add over $20bn to the final bill because it would bring cash penalties under the Clean Water Act. The latest update on the continuing costs of the Macondo blowout from 2010 came with the fourth quarter operating results for 2013. Exploration write-offs, weaker refining margins and the impact of a huge divestment programme pushed the final quarter result on an underlying cost basis, the one oil companies most commonly use down to $2.8bn , compared with $3.9bn for the same period of 2012. Full year profits on the same basis were down to $13.4bn for 2013 compared with $17.1bn for 2012. The figures, considerably better than those released last week by Shell , were helped by a $1bn income boost from its new holding in Russia's Rosneft plus some strong oil and gas production in the North Sea and Gulf of Mexico . BP has rewarded shareholders with a fourth quarter dividend of 9.5 cents per share, 5.6% higher than the one handed out in same period last year. Bob Dudley , the BP chief executive, said he was pleased with the results: " BP delivered strong operating performance throughout 2013, with increased asset reliability and major project delivery in both our Upstream and Downstream businesses. These achievements underpin our financial targets for 2014 and lay the foundation for continued growth in sustainable free cash flow." BP had been forecast by analysts to produce profits of $2.7bn in the fourth quarter, 32% lower than the same period last year. Shell saw a 71% dive in earnings and a profit warning while BG, another rival, also issued a profit warning . But BP has continued to struggle to rid itself of the legacy from the Deepwater Horizon accident in which 11 oil workers died and miles of beaches were despoiled. Only last week the US Department of Justice turned the pressure up against it by saying it should remained barred from winning new contracts in the Gulf of Mexico . The company had still not demonstrated it was a "responsible" contractor, according to the DoJ, while a court in New Orleans continue to decide whether or not it acted with "gross negligence". Earlier this month BP failed to overturn judicial approval of a compensation settlement it reached in 2012. But BP said on Tuesday that 2013 was the best year for oil and gas finds in almost 10 years. The company also recently announced it had won permission to drill in environmentally sensitive waters off Greenland , though it will not act as operator.


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Source: Guardian Web


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