BP faces first annual loss since 1992 on oil spill disaster

1st February 2011, Comments 0 comments

BP on Tuesday posted its first annual loss in almost two decades as a result of last year's devastating Gulf of Mexico oil spill, and raised the estimate of costs from the disaster to $40.9 billion.

The company said it made a loss of $4.9 billion (3.6 billion euros) last year, which was the first shortfall since 1992 and followed the worst environmental catastrophe in US history.

The loss compared with a profit of $13.955 billion in 2009, while the costs estimate was lifted from previous guidance of $40 billion, it added in a results statement.

However, the company will resume payment of its shareholder dividend at seven cents per share. The payout was suspended in the wake of the devastating spill, in the face of intense US political pressure.

BP also said it would sell two major US refineries -- including its Texas City facility which had suffered a deadly 2005 explosion that killed 15 workers and sparked safety concerns across its US operations.

"For the full year, the reported result was a loss of $4.9 billion, including a total pre-tax charge related to the Gulf of Mexico oil spill of $40.9 billion," BP said in the earnings release.

Last year's Gulf oil disaster was triggered by a blast on the Deepwater Horizon rig -- leased by BP and operated by Transocean Energy -- that killed 11 workers on April 20.

The broken well was eventually plugged but not before it gushed about 4.9 million barrels of oil into the Gulf waters.

"2010 will rightly be remembered for the tragic accident and oil spill in the Gulf of Mexico and it is clear that as a result BP is a company in transition," Chief Executive Bob Dudley said on Tuesday.

"I am determined that we will emerge from this episode as a company that is safer, stronger, more sustainable, more trusted and also more valuable."

Dudley added: "2011 will be a year of recovery and consolidation as we implement the changes we have identified to reduce operational risk and meet our commitments arising from the spill."

The group also said that fourth-quarter profits stood at $4.6 billion in the fourth quarter, or three months to December, compared with $3.4 billion last time around.

BP is meanwhile expected to benefit after oil prices surged past $100 per barrel this week.

Oil had rocketed beyond $100 for the first time since 2008 on Monday, boosted by fears about the impact of the Egypt crisis on global crude supplies.

The Gulf of Mexico spill ruined hundreds of miles of fragile coastlines and caused BP's share price to collapse as its international reputation took a hammering.

The catastrophe prompted the resignation of chief executive Tony Hayward and led BP to announce that it was selling assets worth up to $30 billion.

"BP remains on track to meet its target of up to $30 billion of divestments by the end of 2011, having concluded agreements for divestments totalling around $22 billion by the end of 2010," it said Tuesday.

Seeking to move on from the disaster, BP unveiled plans earlier this month to create a joint venture for Arctic oil exploration with Rosneft and take a cross-shareholding.

But Russian shareholders in BP's other Russian joint venture, TNK-BP, have filed a complaint with a London court seeking to block the transaction.

"The ground-breaking alliance between Rosneft and BP ... is a key step forward in BP's strategy to seek material positions in the world's leading hydrocarbon basins," the firm said Tuesday.

"The alliance offers BP a world-class opportunity to work in the Russian Arctic, and the two companies have agreed to seek additional opportunities for international collaboration."

In morning trade, the group's share price slid 1.46 percent to 477.9 pence on London's FTSE 100 index, which gained 0.49 percent in value.

© 2011 AFP

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