BP today announced its financial results for the fourth quarter and full year of 2012. Underlying replacement cost profit, adjusted for non-operating items and fair value accounting effects, was $4.0 billion for the fourth quarter, compared to $5.0 billion for the same period in 2011. For the full year, underlying replacement cost profit was $17.6 billion compared to $21.7 billion in 2011.
Bob Dudley, BP Group Chief Executive, said: "We have moved past many milestones in 2012, repositioning BP through divestments and bringing on new projects. This lays a solid foundation for growth into the long term. Moving through 2013 we will deliver further operational milestones and remain on track for delivery of our ten-point strategic plan, including our target for operating cash flow growth, by 2014."
Operating cash flow in the fourth quarter of 2012 was $6.3 billion, and $20.4 billion for the full year compared to $22.2 billion in 2011. At the end of 2012, BP's net debt was $27.5 billion - down from $31.5 billion at the end of the third quarter - representing a gearing level of 18.7%, within BP's 10-20% target gearing range.
BP announced a quarterly dividend of 9 cents a share, to be paid in March.
In BP's upstream, underlying production of oil and gas, excluding TNK-BP, in 2012 was broadly flat with 2011, in line with guidance. Fourth quarter production, excluding TNK-BP, was 2.29 million barrels of oil equivalent a day (mmboe/d), 7% lower than in 4Q 2011, with the impact of divestments, production sharing agreement effects and natural field declines partially offset by new production from major projects.
BP's downstream delivered a record level of earnings for the year, and a fourth consecutive year of underlying profit growth. In the fourth quarter, despite the continued benefit of strong operations, the segment faced significantly lower refining margins than in the previous quarter. The planned outage at the Whiting refinery as part of the refinery's upgrade project also had an impact on the quarter's result.
BP's fourth-quarter replacement cost (RC) profit was $2,139 million, compared with $7,606 million for the same period in 2011. After adjusting for a net loss from non-operating items of $1,825 million and net unfavourable fair value accounting effects of $20 million (both on a post-tax basis), underlying RC profit for the fourth quarter was $3,984 million, compared with $4,986 million for the same period in 2011. Underlying RC profit for the fourth quarter included $4,359 million of underlying RC profit before interest and tax for Upstream, $1,390 million for Downstream, $224 million for TNK-BP, a loss of $447 million for Other businesses and corporate and a $428 million consolidation adjustment to eliminate unrealised profit in inventory.
For the full year, RC profit was $11,993 million, compared with $23,900 million in 2011. After adjusting for a net loss from non-operating items of $5,300 million and net unfavourable fair value accounting effects of $345 million (both on a post-tax basis), underlying RC profit for the full year was $17,638 million, compared with $21,658 million for the same period in 2011. RC profit or loss for the group, underlying RC profit or loss and fair value accounting effects are non-GAAP measures and further information is provided on pages 6, 21 and 23.
The group income statement included a net adverse impact relating to the Gulf of Mexico oil spill, on a pre-tax basis, of $4,132 million for the fourth quarter (which included $3.85 billion in relation to the agreement with the US government to settle all federal criminal charges) and $5,014 million for the full year. All amounts relating to the Gulf of Mexico oil spill have been treated as non-operating items. For further information on the Gulf of Mexico oil spill and its consequences see pages 3 - 5, Note 2 on pages 26 - 33 and Legal proceedings on pages 37 - 46.
Including the impact of the Gulf of Mexico oil spill, net cash provided by operating activities for the fourth quarter and full year was $6.3 billion and $20.4 billion respectively, compared with $5.0 billion and $22.2 billion in the same periods of 2011. Excluding amounts related to the Gulf of Mexico oil spill, net cash provided by operating activities for the fourth quarter and full year was $5.7 billion and $22.8 billion respectively, compared with $6.2 billion and $29.0 billion for the same periods of 2011. We expect to see net cash provided by operating activities of between $30 billion and $31 billion in 2014(d), consistent with the cash flow objectives we set in 2011 as part of our 10-point plan.
Net debt at the end of the quarter was $27.5 billion, compared with $29.0 billion at the end of 2011. The ratio of net debt to net debt plus equity at the end of the quarter was 18.7% compared with 20.5% at the end of 2011. We will continue to target a net debt ratio in the 10-20% range, while uncertainties remain. Net debt is a non-GAAP measure. See page 7 for further information.
BP today announced a quarterly dividend of 9 cents per ordinary share ($0.54 per ADS), which is expected to be paid on 28 March 2013. The corresponding amount in sterling will be announced on 18 March 2013. A scrip dividend alternative is available, allowing shareholders to elect to receive their dividend in the form of new ordinary shares and ADS holders in the form of new ADSs. Details of the scrip dividend programme are available at bp.com/scrip.
