BP logs first annual loss since 1992 on oil spill disaster

1st February 2011, Comments 0 comments

Crisis-hit BP reported its first annual loss in almost two decades on Tuesday, as a result of the Gulf of Mexico oil spill disaster, and outlined plans to shift its focus away from the United States.

BP suffered a loss of $4.9 billion (3.6 billion euros) last year, which was the first shortfall since 1992 and compared with a healthy profit of $13.955 billion in 2009, it revealed in a results statement.

The energy major also raised the estimate of costs from the devastating oil spill to $40.9 billion, compared with previous guidance of $40 billion.

But 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.

"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.

"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."

BP's fortunes were ravaged last year by the oil spill, which was widely acknowledged to be the worst environmental catastrophe in US history and knocked billions of dollars off the its value.

The group is now trying to move on from the oil disaster after agreeing to sell $30 billion of assets to help pay for the clean-up bill.

On Tuesday, it announced plans to halve its refining business in the United States, less than one month after unveiling a transformational deal with Rosneft to explore the Russian arctic.

BP will seek to 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.

Dudley said Tuesday that BP would continue to reshape and refocus as it looks towards "resetting" the company.

"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," said the BP boss.

"But it will also be a year in which we have the opportunity to reset the company, adjusting the shape of our business, and focus on growing value for shareholders."

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.

BP added Tuesday 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.

"The numbers themselves are almost a sideshow to the more fascinating story of a company in the middle of a major transition," said equities analyst Richard Hunter at Hargreaves Lansdown Stockbrokers.

BP is meanwhile expected to benefit after oil prices surged past $100 per barrel this week, amid market fears over the impact of the Egypt crisis on global crude supplies.

The Gulf of Mexico spill damaged 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 major assets. By the end of 2010, the firm had agreed to sell assets worth $22 billion, almost a third short of its target.

As BP looks to shift its focus away from the US, it last month unveiled plans 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.

In early afternoon trade on Tuesday, the group's share price dipped 0.44 percent to 482.74 pence on London's FTSE 100 index, which gained 0.91 percent.

However, the stock has shed nearly 25 percent in value since April 19, 2010, which was the day before the Deepwater Horizon blast.

© 2011 AFP

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