Wed, Feb 02, 2011 - Page 10 News List

As earnings rise, BP starts paying dividends again

Bloomberg

A BP logo is seen at a gas station in London yesterday.

Photo: Reuters

BP PLC, Europe’s second-biggest oil company, reinstated the dividend that was suspended after the Gulf of Mexico spill as higher oil prices lifted earnings.

The company will pay a dividend of US$0.07 a share for the last three months of last year after canceling the payout for the first three quarters of the year. That compared with US$0.14 before the spill. It plans to sell its Texas City and Carson refineries by the end of next year.

CEO Robert Dudley is seeking to extend BP’s 60 percent share-price recovery since June following the worst spill in US history that cost his predecessor, Tony Hayward, his job.

The company has shored up finances by raising US$22 billion from asset sales and agreed to a US$8 billion share swap with OAO Rosneft to give it access to untapped Russian reserves in the Arctic Kara Sea.

NET INCOME

Fourth-quarter net income was US$5.6 billion, compared with US$4.3 billion in the year-earlier period, the London-based company said in a statement in London.

Exxon Mobil Corp, the world’s largest company, on Monday reported its highest quarterly profit in more than two years of US$9.25 billion.

BP announced the restoration of the dividend even after its billionaire partners in TNK-BP voted to block the Russian joint venture’s US$1.8 billion dividend while it disputes the Rosneft deal. TNK-BP accounts for a quarter of BP’s output and a fifth of its reserves.

In October, BP agreed to sell operations in Vietnam and Venezuela to TNK-BP for US$1.8 billion. BP pledged to sell as much as US$30 billion of assets to help cover costs from the spill and the US$20 billion fund set up with US President Barack Obama to compensate victims. Kenneth Feinberg, who is administering the fund, said in a Dec. 31 Bloomberg Television interview that US$10 billion may be “more than enough to pay all the claims.”

BP took charges totaling US$40 billion in the second and third quarters to account for the cost of the Gulf spill.

HIGHER PRICES

BP’s earnings were bolstered by higher oil prices and improved refining margins. Brent futures have gained more than 25 percent since the start of last year. BP’s Global Indicator Margin, a broad measure of refining profitability, averaged US$4.64 a barrel in the fourth quarter, up from US$1.49 in the year-earlier period.

Upon taking the helm on Oct. 1, Dudley split the exploration and production division into three, ousting executive director Andy Inglis in the process, and created an independent safety division.

He reiterated that the company won’t turn its back on the US after the spill, where the Gulf of Mexico accounts for about a tenth of BP’s global production.

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