Oil giant BP beats forecasts with $5.2bn profit

PanARMENIAN.Net - Oil giant BP raced ahead of analysts' expectations with a third-quarter profit of $5.2bn (£3.2bn) and is raising its dividend for shareholders, The Guardian reports.

A week after announcing the sale of its 50% stake in Russian oil group TNK-BP to the Kremlin-controlled Rosneft, BP said it would increase its third-quarter dividend to 9¢ per share - a rise of 12.5%. BP's chief executive, Bob Dudley, said: "BP's performance and the strong progress we are making in transforming the company give us the confidence to increase distributions to our shareholders." The third quarter underlying replacement profit - a figure that strips out fluctuations in oil prices - beat forecasts by more than $1bn, but represented a decline of 5% on the same period last year due to a number of divestments made by BP over the past 12 months.

BP said its results were boosted by a strong performance in its downstream business, led by improved profitability at its refining units, while its upstream business - oil and gas production - posted a similar performance to the previous quarter. BP's US refineries have struggled for profitability in recent years but problems at rival refiners, including Exxon's Beaumont facility, helped boost profits over the past three months. In the wake of the Gulf of Mexico spill, which has cost BP tens of billions of dollars, the group has outlined a 10-point strategy that includes developing more profitable oil and gas fields. With that target in mind, the majority of BP's significant new projects that are due to come into production by 2014 are in four areas: the Gulf of Mexico, Angola, Azerbaijan and the North Sea. "All of these projects are on track," said BP.

As part of its post-spill strategy to slim down the group and raised compensation funds, BP has divested $35bn worth of businesses including $11bn in disposals since the second quarter, led by its Texas City and Carson refineries in the US. BP said it will make a "final" payment of $860m into a $20bn Gulf of Mexico compensation fund. Excluding that $20bn fund, the group has paid out $15bn in compensation and clean-up costs so far. However, it is still negotiating a settlement with the U.S. Department of Justice over criminal and civil offences.

BP said: "Whilst [BP] is ready to settle on reasonable terms, a number of unresolved issues remain and there is significant uncertainty as to whether an agreement will ultimately be reached."

According to reports, the DoJ could be seeking a settlement of at least $18bn, while BP is holding out for $15bn.