BP falls to $3.3 billion loss in Q4

[February 03, 2009]  LONDON (AP) -- BP PLC, the second-largest European oil company, said Tuesday it swung to a steep loss of $3.3 billion during the fourth quarter of 2008 as sliding oil prices hit revenues hard.

The company said its net loss of $3.3 billion during the October-December period was well below the $8 billion profit in the third quarter and a $4.4 billion profit in the same period in 2007.

For the full year, BP said net profit was $21.2 billion, up slightly on 2007's $20.8 billion.

The drop in the fourth-quarter performance was due to the collapse in oil prices. In mid-July, oil prices were around $147 a barrel. Since then, fears about the global economic outlook have pushed oil prices down to around $40 a barrel.

When oil price changes on unsold inventories are stripped out, BP remained in the black during the fourth quarter, the company said. So-called replacement cost profit -- a key measure for oil companies -- was $2.6 billion in the fourth quarter of 2008, down on 2007's equivalent of $3.4 billion.

Though the replacement cost profit during the period was hefty it was at the bottom end of market expectations. Analysts were looking for replacement cost profit to be around $3 billion during the quarter.

BP blamed currency changes, in particular the fall of the euro and the pound against the dollar, as well as higher tax bills in Russia, for the weak performance.

For the year as a whole, replacement cost profit rose 39 percent to $25.6 billion.

BP said it will pay a quarterly dividend of 14 cents a share. Though that was up on the 13.25 cents delivered a year ago, the dividend was unchanged on the previous two quarters.

The markets gave a thumbs down to BP's results, sending the shares down 4.3 percent to 463.75 pence on the London Stock Exchange.

"BP looks like a company that may have temporarily lost its way as it reported its first quarter loss in 7 years," said Manoj Ladwa, a senior trader at ETX Capital in London.

With the oil price so volatile, BP said it will continue to focus on cutting costs.

Under new chief executive Tony Hayward the group has been looking to boost efficiency to close the gap on Royal Dutch Shell, Europe's largest oil company, with measures such as 5,000 job cuts in order to streamline the business.

"In the current climate we especially need to maintain the momentum we have established in the drive to make BP more efficient... The next year or two will be challenging, but we are well-placed to meet that challenge," Hayward said.

Although exploration and production profits are likely to suffer from the lower oil prices, the firm said it has improved the efficiency of its refining operations in the U.S.

BP has been dogged by problems at its U.S. refineries, but has rebuilt capacity at its Texas City and Whiting sites. Refining availability rose to 91 percent in the last three months of 2008 -- the highest level for three years.

[Associated Press; By PAN PYLAS]

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