BP reports drop in profits

Earnings were hit by a fall in production after assets were sold off, as well as from weaker margins in its refining business. Fourth quarter underlying profits were also down, by 27 per cent, to 2.8 billion US dollars (£1.7bn).

Markets had been expecting a fall and the figures were slightly better than expected.

BP’s profits were also hit by write-offs due to the failure of an exploration well in Brazil to encounter commercial quantities of oil or gas.

But these factors were partially offset by strong growth in underlying gas and oil production, particularly from key regions such as the North Sea, Angola and Gulf of Mexico.

The company continues to grapple with the costs of the Gulf of Mexico oil disaster in 2010, which left 11 workers dead and sparked the worst oil spill in US history.

It said this had an adverse impact on a pre-tax basis of 469 million US dollars (£288m) for the year. The total charge recognised to date stands at 42.7 billion US dollars (£26.2bn).

BP is appealing a court ruling over bogus claims on its compensation scheme and is asking for an injunction “to prevent awards to claimants whose losses are not traceable to the spill”.

Chief executive Bob Dudley said BP had delivered a “strong operating performance” throughout the year.

It announced a fourth quarter dividend of 9.5 cents (5.8p) per share to be paid in March, 5.6% higher than the pay-out for the same period last year.

BP has completed a 38 billion US dollar (£23.3bn) divestment of assets and said in October that it expects to dispose of 10 billion US dollars (£6.1bn) more by the end of 2015. It said to date that 1.7 billion US dollars (£1bn) of these transactions had been agreed.

Meanwhile, it has so far repurchased 6.8 billion US dollars (£4.2bn) of stock under an 8 billion US dollar (£4.9 billion) share buyback programme announced last March.

The results come in the wake of a 23 per cent slide in annual profits for rival Shell.