Europe’s second-largest oil company brought in $7.7 billion in profit, a 38 percent increase from fourth quarter profits of the previous year, while replacement cost net profit was up 65 percent at $7.6 billion for the quarter. Industry rival Royal Dutch Shell saw an 18 percent increase in profit, while Exxon Mobil reported a meager 2 percent rise.
Accompanying BP’s fourth quarter gains is a 14 percent hike in the company’s dividend to 8 cents per share, substantiated by strong quarterly cashflows due to higher oil prices. CEO Bob Dudley predicts an ambitious 50 percent increase in operating cash flow by 2014, provided oil prices remain around $100 per barrel.
Following the recent industry trend, BP plans to raise its capital expenditure budget in 2012, in addition to raising its dividend, to facilitate exploration projects, boost production, and improve operational performance.
Unfortunately, BP’s strong fourth quarter results pale in comparison to the billions of dollars in lawsuits they’re facing brought on by the worst offshore oil spill in U.S. history, reaching an estimated total cost of $43 billion. BP and its partners are facing approximately 600 individual civil lawsuits in addition to massive government fines and further litigation.
BP is reportedly “willing to settle on fair and reasonable terms” before going to court, but is “ready to fight” at its upcoming civil compensation trial of limitation and liability in New Orleans on Feb 27th.
If the company is found guilty of gross negligence it could be liable for tens of billions of dollars in fines and other payouts. They could face a fine of $4,300 per barrel spilled under the Clean Water Act. Total compensation is predicted to be between $20 and $25 billion.
Until next time,