Financial News

  • 30 April 2014, 5:44

BP Profits Rise 15% But Take Russia Hit

BP has reported a 14.8% increase in quarterly profits that were hit by a falling contribution from its stake in Russia's Rosneft amid the crisis in Ukraine.

The British oil firm posted underlying replacement cost profit of $3.2bn (£1.9bn) in the first quarter - up from $2.8bn (£1.67bn) in the previous quarter but down from the $4.2bn (£2.5bn) in the same period a year ago.

The company said it was raising its quarterly dividend by 8.3% to 9.75 cents (6pm) on the back of the performance, which came in ahead of expectations despite a number of headwinds.

A weaker refining environment and lower production - a result of the company's asset sale to raise funds to cover the cost of the Gulf of Mexico disaster - all hit earnings.

But it was the company's 20% stake in Russia's majority state-owned Rosneft which was firmly in the spotlight as western sanctions hit Russian firms in response to the crisis in Ukraine.

BP has repeatedly said it will stand by its investments in Russia. 

Russian production was responsible for about a third of BP's output in the first quarter.

The company said on Monday it was considering what sanctions against the head of the Russian energy company, Igor Sechin, would mean for its business.

The share of profits BP generated from Rosneft, which last quarter accounted for about a quarter of its total, shrunk significantly due to the weakening rouble, as Russia's economy comes under pressure from the tense stand-off with the West.

BP reported an estimated underlying pre-tax replacement cost profit for Rosneft of $271m (£161m) for the same quarter.

Chief executive Bob Dudley said the company was delivering on its targets and that the focus was on returning cash, with $7.6bn (£4.51bn) of its $8bn (£4.76bn) share repurchasing operation now completed.

"As well as progressive growth in the dividend per share, we expect to use surplus cash to support further distributions through share buy-backs or other mechanisms," Mr Dudley said.

The company said its legal battles in the US linked to the massive oil spill of 2010 were continuing and provisions to cover the clean-up, fines, compensation and legal costs had not risen in the quarter, remaining at $42.7bn (£25.4bn).

Its ban on exploring for oil in the Gulf of Mexico and winning US government contracts was lifted last month, nearly four years after the Deepwater Horizon disaster.

Advertisement