BP raises dividends

BRITISH oil major BP underlined its return to health yesterday by hiking its dividend and announcing further activity in the North Sea and Gulf of Mexico.

Higher fourth-quarter profits on the back of solid oil prices allowed BP to raise its shareholder payout for the first time since it was reinstated following the Deepwater Horizon disaster.

Calculated on the replacement cost basis favoured by the oil industry, BP’s quarterly profits after stripping out one-offs were up 14 per cent to some $5 billion (£3.1bn), underpinning the rise in its quarterly payout from seven to eight cents per share. For the full year, BP swung to a $23.9bn profit compared with a $4.9bn loss in 2010.

Rival Royal Dutch Shell reported an 18 per cent rise in quarterly profits last week, while industry leader Exxon Mobil only managed a 2 per cent rise.

Chief executive Bob Dudley said BP was “on the right path”, playing to its strengths by investing in exploration, deep water projects and giant oil fields.

He said that “2012 will be a year of increasing investment and milestones as we build on the foundations laid last year.

“As we move through 2013 and 2014, we expect financial momentum will build as we complete payments into the Gulf of Mexico Trust Fund, restore high-value production and bring new projects on stream.”

This year, the company will drill twice as many exploration wells as it did in 2011.

Six major projects in Angola, the Gulf of Mexico and the North Sea are expected to come on stream in 2012. By the end of the year, BP expects to have eight rigs in the Gulf of Mexico.

It confirmed yesterday that it had sanctioned a new development in the Gulf with the decision to start work at the Mad Dog field it shares with Chevron and BHP. It will be one of the largest free-standing developments in the region.

Dudley said he expects capital spending will grow to some $22bn in 2012, up from last year’s $19b, with the lion’s share going on upstream projects.

Although BP’s results were slightly better than the City had expected, analysts remained cautious as the company approaches the 27 February trial deadline for claims relating to the April 2010 oil spill off the US Gulf Coast.

In October, BP reached an agreement with partner Anadarko Petroleum that saw the US firm pay $4bn towards the clean-up costs. It is still in dispute with its other major partners from the Macondo well, Transocean and Halliburton, although many analysts are still betting on the companies reaching an agreement out of court.

Dudley said BP was ready to settle the 600 or so civil lawsuits it faces in relation to the tragedy, as well as litigation from the US government, on “fair and reasonable terms”.

But he said BP was also preparing “vigorously” for a possible trial should terms not be agreed.

The company has spent more than $2bn on legal fees alone in relation to the spill.