BP announced its third quarter 2013 results today from London, trumpeting that it has raised its dividend and set a new divestment target.
The company's financial results for the quarter show an underlying replacement cost profit of $3.7 billion, compared to $2.7 billion for the previous quarter. Operating cash flow in the quarter was $6.3 billion, the company said.
BP also announced that it will increase its quarterly dividend by 5.6 percent, to 9.5 cents per ordinary share, payable in Dec.
Bob Dudley, BP Group Chief Executive, said:
In 2011 we set a clear target for operating cash flow in 2014 and we are confident in its delivery. The strong operational progress we are now seeing across the group, combined with our focus on disciplined investment, also underpins our confidence in growing long-term sustainable free cash flow and being able to increase shareholder distributions. Today’s announcement is a further demonstration of this.
The results come as the company continues to grapple with legal entanglements resulting from the Apr. 20, 2010 Macondo well blowout and oil spill off the coast of Louisiana. BP mentioned in today's release that,
The total cumulative net charge to BP’s accounts related to the Gulf of Mexico oil spill now stands at $42.5 billion.
Yet, the show is clearly going on, with Dudley stating that "in line with continued capital discipline, we expect BP’s capital spending in 2014 to remain around the level expected for this year, in the range of $24–to–$25 billion.”
The oil chief added that the company also intends to continue focusing its business portfolio worldwide around the company's key assets and "strategic strengths", expecting to further divest $10 billion in assets before the end of 2015.
Other particulars from today's earnings report show that:
- At the end of the third quarter, BP’s net debt ratio was 13.3 percent, at the low end of BP’s target range of 10-20 percent.
- Underlying pre-tax replacement cost profit in BP’s upstream segment (or production & exploration) was $4.4 billion for the third quarter, slightly higher than the previous quarter.
- Total reported production of oil and gas for the quarter, including Russia, was 3.17 million barrels of oil equivalent a day (boe/d).
- Continuing growth in production from new major projects drove underlying oil and gas production, excluding Russia, higher by 3.4 percent compared to the third quarter of 2012. Reported production, excluding Russia, of 2.21 million boe/d was 2.3 lower than a year earlier, primarily reflecting the impact of divestments.
BP’s downstream segment (the refining and natural gas purification segment) reported an underlying pre-tax replacement cost profit of $0.7 billion. The segment continued to deliver a "strong operating performance", BP said.
In the quarter BP announced exploration discoveries - in the East Nile Delta offshore Egypt and in the Cauvery basin offshore the south east coast of India - which it considers significant. These followed an earlier significant discovery, announced in May, in the KG D6 block offshore India, the company pointed out.
So far this year BP has participated in 12 completed exploration wells and a further eight wells are currently drilling.
BP said they anticipate 16-18 exploration wells to be completed in 2013. Earlier in October, BP reached agreement to farm-in to three deepwater exploration blocks offshore Morocco, representing another significant addition to the company’s Atlantic Basin exploration portfolio, the company said.
BP is producing from Skarv in Norway and PSVM in Angola, which both came on stream in December 2012, they point out.
Most significantly, the company wrote a "US legal update" that details the following:
- The second phase of the MDL 2179 trial in New Orleans completed Oct. 18. BP does not know when the Court will issue a ruling on the issues presented in the first two phases of the trial. The next phase, in which the court will consider the penalty factors set out in the Clean Water Act, is expected to take place in 2014.
- On Oct. 2, following BP’s appeal regarding the interpretation of the framework relating to business economic loss (BEL) claims in the settlement reached with the Plaintiffs’ Steering Committee (PSC), the US Court of Appeals for the Fifth Circuit issued a ruling reversing the Claims Administrator’s interpretation of the settlement, remanding to the District Court for further proceedings and directing the District Court to issue a temporary injunction that suspends payments to claimants affected by the misinterpretation issue and who do not have “actual injury traceable to loss from the Deepwater Horizon accident.”
- Pending implementation of the Fifth Circuit’s directions, there is now significant uncertainty as to the amount of BEL claims which have been processed but not yet paid and that will be determined to be payable in the future. BP has therefore derecognized the provision that had been made for these claims.
To read the entire press release from BP today, please click here.
Bold marks and hyperlinks are those of the Examiner's.
BP's press release, as quoted, was edited for American English and style.