BP profits fall on weakness in refining business
By Sarah Young
LONDON (Reuters) - BP (BP.L: Quote) reported a sharp drop in fourth-quarter profits on Tuesday partly due to weakness in its refining business, providing more evidence of difficult times across the "big oil" sector.
BP's results, hit by tough conditions in U.S. refining and partly offset by strong contributions from its stake in Russia's Rosneft (ROSN.MM: Quote), highlighted the industry's struggle to increase profits in the face of rising costs.
The world's fourth-biggest publicly traded oil company on Tuesday reported underlying replacement cost profit of $2.8 billion for the fourth quarter of 2013, 28 percent lower than the same period a year ago, but ahead of a consensus forecast of $2.7 billion.
Exxon Mobil Corp (XOM.N: Quote), the world's largest publicly traded oil company by market value, reported lower-than-expected quarterly profit last week, while Chevron and BP's European rival Shell (RDSa.L: Quote) both issued profit warnings in January.
Investec analysts said BP's beat on the consensus for underlying replacement cost profit was partially a result of a lower tax charge during the quarter compared to last year.
Bernstein analyst Oswald Clint said on an operational basis, the company missed a consensus target by around 10 percent and its performance would have looked bleaker without the strong performance from its stake in Rosneft.
BP is also dealing with the fallout from the Gulf of Mexico oil spill which killed 11 men and became the United States' worst offshore environmental disaster.
The company said the provision to cover the spill's clean-up, fines, compensation and legal costs had now risen to $42.7 billion from $42.5 billion last year. Continued...