BP profit misses forecasts
British oil major BP Plc
Europe's largest oil company by market capitalization said on Tuesday it had addressed a number of areas of investor concern in 2009, lifting production of oil and gas 4 percent, bringing its refineries back up to full capacity and finding more oil than it produced in the year.
However, Chief Executive Tony Hayward said output was likely to fall in 2010 and refining margins would stay depressed.
Hayward added that while oil prices, whose recovery was the main driver of BP's quarterly earnings rise, were well supported by OPEC, gas prices would remain volatile.
One analyst said BP's rising operating costs would mean the $4 billion of savings BP achieved in 2009 were unlikely to be repeated.
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BP's experience reflects the recovery in major economies in the United States and Europe, which would be slow and gradual, CEO Hayward said.
BP shares traded down 4.6 percent at 567 pence at 1128 GMT, lagging a 1.1 percent drop in the DJ Stoxx European oil and gas sector index <.SXEP>.
BP outperformed forecasts by about 50 percent in the third quarter, and the market's disappointment reflected high expectations, as the results were comparatively strong, Colin Smith oil, analyst at ICAP said.
PRESERVING CASH
BP kept its quarterly dividend flat at 14 cents/share and said it would ask shareholders, until last year used to strong rises in dividends, to allow it to offer dividends in the form of shares in future.
This would be more tax efficient for some shareholders and give BP more financial flexibility, a spokesman said.
Nonetheless, with BP's gearing at the bottom end of its target range, the London-based company offers one of the best and most secure dividends in the sector, analysts at Evolution Securities said in a research note.
BP said replacement cost profit, which strips out unrealized gains or losses related to changes in the value of oil inventories, was $3.45 billion in the quarter.
Excluding one-off and non-operating items, which amounted to a net charge of $937 million, the RC result was $4.38 billion, behind an average forecast of $4.65 billion from a Reuters poll of nine analysts.
The miss was mainly due to BP barely breaking even in its refining business.
Analysts had expected a weak quarter after average margins fell to their lowest level since the first quarter of 1995, but BP said its margins were even weaker than the average.
BP said output rose 3 percent in the quarter compared with the same period in 2008, to 4.05 million barrels of oil equivalent per day, thanks to new field start ups in the Gulf of Mexico and the low impact of hurricanes.
North Sea Brent crude averaged $74.53 a barrel in the quarter, BP said, compared with $55.48 in the same period of 2008. However, gas prices were sharply lower.
Oil prices in 2009 were also sharply lower than in 2008, which drove the 45 percent drop in annual profit to $14 bln.
(Editing by Eric Auchard and Erica Billingham)
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