BP profits fall but dividend is raised 12.5%

BP

Last Updated at 23 Apr 2014, 06:55 ET *Chart shows local time BP intraday chart
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Oil giant BP has reported a fall in profits for the past three months.

Replacement cost profit, which strips out the effect of oil price movements, was $4.69bn (£3bn), down from $5.27bn for the quarter last year.

However, chief executive Bob Dudley said the figures showed "strong progress" at BP, which is raising the quarterly dividend by 12.5%.

Mr Dudley added that BP was "on track with our strategy to 2014" and was laying foundations for growth.

The profit figures were helped by better-than-expected margins in BP's refining operations. Investors sent BP shares up almost 5% in morning trading.

Richard Hunter, head of equities at Hargreaves Lansdown Stockbrokers, said: "It has been an immensely complicated time for BP and this update reflects just how much progress has been made."

BP believes it is entering a new era, as it tries to put the turmoil of the last few years behind it.

The company has signed a major deal with Rosneft to sell its stake in TNK-BP, ending the troubled relationship with its Russian partners in the joint venture. It also re-stated on Tuesday its hope that it can settle civil and criminal claims over the Gulf of Mexico oil platform disaster.

However, BP's statement said: "BP is in ongoing discussions with the Department of Justice and other federal agencies regarding a possible settlement of these claims and whilst it 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.

"BP has repeatedly said that it is willing to settle on reasonable terms but otherwise continues to prepare vigorously for the start of trial."

The company said it would make a final payment of $860m into the $20bn Gulf of Mexico compensation fund by the end of the year.

Mr Hunter said the size of the trust meant that "the Gulf of Mexico liability is well provisioned" and should help remove some of the uncertainty.

He added: "The recently announced agreement with Rosneft leaves BP with exposure to the important Russian region without some of the previous distractions, and the hike in the dividend is proof of management's optimism for prospects."

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