LONDON — Oil and gas giant BP’s profit fell nearly 80 percent in the fourth quarter in results released Tuesday, dragged down by payouts related to the Gulf of Mexico oil spill.
BP said that net profit fell to $1.62 billion in the three months ending Dec. 31, down from $7.69 billion in the same period the year before. BP took a loss of $3.85 billion for its settlement of all federal criminal charges with the U.S. government.
The company’s settlement with the U.S. Justice Department shut the book on the criminal investigation of BP’s role in the 2010 Deepwater Horizon disaster and Gulf oil spill, but civil claims remain. The London-based oil giant could pay billions more in damages for the 2010 spill.
The results surpassed analysts’ predictions, and BP said that its downstream activities - refining and sale of petroleum products - earned a record amount for the year. Chief Executive Bob Dudley said in a statement that the result “lays a solid foundation for growth into the long term.”
“We will continue to see the impact of this reshaping work in our reported results in 2013,” Dudley said. “By 2014, I expect the underlying financial momentum to be strongly evident.”
Dudley also emphasized that the company remained committed to its exploration in activities in Algeria, despite a terrorist attack that targeted one of its plants last month.
The BP chief said the company was jolted by the four-day siege by Islamist militants whooverran the gas facility and took hostages. Algerian security forces counterattacked and nearly a day passed before the full toll of the disaster became clear. In all, 37 hostages - three of them American - and 29 militants were killed.
The company has racked up more than $24 billion in spill related expenses and has estimated it will pay a total of $42 billion to fully resolve its liability for the disaster in the Gulf of Mexico. At a court hearing last month, U.S. District Judge Sarah Vance described the criminal settlement as “just punishment” for BP - though it could have paid far more and remained in business.
U.S. government investigations have blamed the disaster on cost-cutting and time saving decisions BP and its partners made on the project. About 4.8 million barrels of oil-spilled, some of it ending up on the shorelines of several states. A barrel is 42 gallons.
Until all claims are settled, analysts remain unconvinced about the future, Richard Hunter, head of equities at Hargreaves Lansdown Stockbrokers.
“BP made much progress during the full year, yet it is still far from being out of the woods,” he said in a statement.
Billions of dollars more are at stake for a civil trial set to start Feb. 25 if a judge rules the company acted with gross negligence. BP said it wasn’t grossly negligent.
The trial is designed to identify the causes of BP’s well blowout. The first part of the trial also is designed to proportion blame among BP and its partners in the ill-fated project.
Business, Pages 26 on 02/06/2013