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BP 2012 profits halve due to Gulf of Mexico charges

05 February 2013

BP profits halved in 2012 to $12bn as the company weathered asset sales, writedowns and charges relating to the Macondo disaster in the Gulf of Mexico  in April 2010. The oil major booked some $5.6bn of one-off costs over the year including a net charge of $1.8bn in the fourth quarter, which included criminal penalties over the 2010 spill.

Its results also suffered from a 5.7% fall in oil and gas output over the year after the sale of assets to help pay for costs related to the Macondo disaster. Excluding one-off items, full-year underlying profits fell 19% to $17.6bn.

Bob Dudley, BP 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.”

BP’s results come barely two weeks after the bloody end to the hostage crisis at its In Amenas jointly-run gas plant. BP said on Tuesday it remained committed to operating in Algeria.

A trial over civil penalties over Macondo is due to begin on February 25 in New Orleans.

BP has settled two litigation cases that were due to be heard at trial. One was on issues of economic loss and medical compensation claims with those affected by the spill and was settled for $7.8bn.

A second was a $4.5bn deal with US authorities over criminal penalties, approved last week, in which BP admitted to the manslaughter of the 11 men who died.

BP said that over 2012 it booked a total of $5bn in one-off charges related to the ongoing costs of the spill, including $3.85bn related to the criminal settlement.

Its second quarter earnings had been heavily affected by one-off charges including a drop in value of shale gas assets and the decision not to proceed with a flagship drilling project off Alaska.

The company has sold $37.8 billion worth of assets since the Macondo spill and taken a total charge against profits of $42.2 billion - most of which has already been paid out in compensation and fines. It also expects to receive $12.3 billion this year from the sale of its Russian interests to Rosneft along with a one-fifth stake in the state company


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