BP PLC announced on Tuesday that it is resuming dividends for the first time since the Gulf of Mexico well disaster, even as a 30 per cent gain in fourth-quarter profits failed to keep it from booking a full-year loss.
BP, whose $5.6 billion net profit in the fourth quarter was larger than expected and boosted by higher oil prices, raised to $40.9 billion its estimate for the cost of the Gulf oil spill. The charge covers the cost of the explosion aboard the Deepwater Horizon rig, which killed 11 workers in April, as well as plugging the well and cleaning up the southern U.S. coast.
The company also announced plans to almost halve its refinery presence in the U.S. by selling two facilities, including the Texas City refinery where 15 workers died in a massive explosion in 2005.
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BP, which suspended dividends following the Macondo well blowout in the Gulf of Mexico in April, said it would pay 7 cents per share - half the amount paid in the fourth quarter of 2009.
“We believe now is the right time to resume payment of a dividend to our shareholders,” said Chairman Carl-Henric Svanberg.
“We have chosen a prudent level that reflects the company’s strong underlying financial and operating performance but also recognizes the need to fully meet our obligations in the Gulf of Mexico and to maintain financial flexibility.”
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The company made a profit of $5.6 billion in the fourth quarter, up from $4.3 billion a year earlier. However, for the full year BP booked a loss of $3.7 billion compared with a profit of $16.6 billion in 2009.
Replacement cost profit - a closely watched industry measure which reflects inventory gains and losses - was $4.6 billion for the quarter, up from $3.4 billion a year earlier. For the full year BP saw a replacement cost loss of $4.9 billion, compared with a profit of $14 billion in 2009.
BP said it had spent more than $1 billion modernizing the Texas City plant, but said it “lacks strong integration into any BP marketing assets.”
However, BP said it will keep the chemicals complex at Texas City.
BP said it also hopes to sell the Carson refinery near Los Angeles along with its marketing business in southern California, Arizona and Nevada. The company plans to concentrate its U.S. refining and marketing activity at Whiting, Indiana and Cherry Point, Washington, in its 50 per cent stake in the Toledo, Ohio refinery.
“2011 will be a year of recovery and consolidation as we implement the changes we have identified to reduce operational risk and meet our commitments arising from the spill,” said BP Chief Executive Bob Dudley. “But it will also be a year in which we have the opportunity to reset the company, adjusting the shape of our business, and focus on growing value for shareholders.” Bob Dudley added.