BP profits slide 22 per cent

Oil giant BP today pledged to close the "performance gap" with its rivals after a 22% fall in profits last year.









The world's third biggest oil firm saw profits tumble to $17.29bn (£8.76bn) in 2007 as problems with its US refineries hit the company.



But chief executive Tony Hayward cheered investors with a 25% dividend hike and progress on plans to create a leaner business by stripping out management.



He confirmed BP's plans to cut 5,000 jobs by the middle of next year, as well as slashing the firm's corporate overheads by up to 20%.



He said: "We are absolutely determined to transform our downstream business as a whole. It will not happen overnight, but we believe that the performance gap with our competitors can be progressively narrowed in the next few years."



The results contrast with rival Royal Dutch Shell, which last week posted record profits of almost £14 billion.



The figures cap a turbulent year for BP, whose long-serving head Lord Browne resigned last May after he lied to a court in a bid to block stories about his private life.



It also faced criticism over the March 2005 explosion at its Texas City refinery, where 15 workers died.



But today shares rose almost 3% as hopes grew for a turnaround of the business.



Hargreaves Lansdown equity analyst Keith Bowman said: "Overall, 2007 was not a vintage one for BP, but the early signs for 2008 are encouraging.



"Despite falling profits over both the fourth quarter and the full year, signs of improving prospects for 2008 are tangible."



BP has struggled with lower margins and production problems with its US refineries, which sent its refining and marketing operation to a fourth-quarter loss of $1.34bn (£678.7m).



Mr Hayward said the performance of refining and marketing was "very poor - despite the fact that we have a strong set of assets".



"The principal reason is poor reliability in some of our US refineries, which is compounded by the complexity and overhead structure of the business segment," he added.



This loss left the group's overall underlying fourth-quarter profits at $4bn (£2.02bn) - well below consensus forecasts of $4.3bn (£2.17bn).



But earnings from the firm's exploration and production division lifted 51% to $7.65bn (£3.87bn) after an improved performance in the final three months of last year.



The group began production from five major projects in Angola, Trinidad and the Gulf of Mexico, and enjoyed exploration successes in Azerbaijan and Egypt.



Over the year, BP produced 3.82 million barrels a day of oil equivalent a day from its E&P division - just inside its forecasts of between 3.8 and 3.9 million.



Mr Hayward added: "We made good, step-by-step progress in bringing new oil and gas fields on stream and rebuilding refining capacity during the period."



The chief executive added that he would boost capital spending by more than 10% to up to $22bn (£11.1bn) in 2008 to raise production levels.



The company is looking to produce more than four million barrels of oil a day in 2009, rising to 4.3 million in 2012, and is now pricing an assumption of crude oil prices at around $60 a barrel into its plans.



BP paid out restructuring costs of $250bn (£126.7bn) in the final three months of 2007 and expects to pay a further $1bn (£506.7m) over the course of this year.



Mr Bowman added: "Production levels have finally begun to improve, cost savings from the group's recently announced restructuring plan should begin coming through and a marked increase in the dividend helps provide underlying support to the share price."

Start your day with The Independent, sign up for daily news emails
ebooks
ebooksAn introduction to the ground rules of British democracy
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
SPONSORED FEATURES
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Recruitment Genius: Sales Executive / Foreign Exchange Dealer - OTE £40,000+

£16000 - £40000 per annum: Recruitment Genius: A Foreign Exchange Dealer is re...

SThree: Experienced Recruitment Consultant

£20000 - £40000 per annum + OTE + Incentives + Benefits: SThree: Established f...

SThree: Trainee Recruitment Consultant

£20000 - £25000 per annum + OTE 40/45k + INCENTIVES + BENEFITS: SThree: The su...

Recruitment Genius: Collections Agent

£14000 - £16000 per annum: Recruitment Genius: This company was established in...

Day In a Page

The long walk west: they fled war in Syria, only to get held up in Hungary – now hundreds of refugees have set off on foot for Austria

They fled war in Syria...

...only to get stuck and sidetracked in Hungary
From The Prisoner to Mad Men, elaborate title sequences are one of the keys to a great TV series

Title sequences: From The Prisoner to Mad Men

Elaborate title sequences are one of the keys to a great TV series. But why does the art form have such a chequered history?
Giorgio Armani Beauty's fabric-inspired foundations: Get back to basics this autumn

Giorgio Armani Beauty's foundations

Sumptuous fabrics meet luscious cosmetics for this elegant look
From stowaways to Operation Stack: Life in a transcontinental lorry cab

Life from the inside of a trucker's cab

From stowaways to Operation Stack, it's a challenging time to be a trucker heading to and from the Continent
Kelis interview: The songwriter and sauce-maker on cooking for Pharrell and crying over potatoes

Kelis interview

The singer and sauce-maker on cooking for Pharrell
Refugee crisis: David Cameron lowered the flag for the dead king of Saudi Arabia - will he do the same honour for little Aylan Kurdi?

Cameron lowered the flag for the dead king of Saudi Arabia...

But will he do the same honour for little Aylan Kurdi, asks Robert Fisk
Our leaders lack courage in this refugee crisis. We are shamed by our European neighbours

Our leaders lack courage in this refugee crisis. We are shamed by our European neighbours

Humanity must be at the heart of politics, says Jeremy Corbyn
Joe Biden's 'tease tour': Could the US Vice-President be testing the water for a presidential run?

Joe Biden's 'tease tour'

Could the US Vice-President be testing the water for a presidential run?
Britain's 24-hour culture: With the 'leisured society' a distant dream we're working longer and less regular hours than ever

Britain's 24-hour culture

With the 'leisured society' a distant dream we're working longer and less regular hours than ever
Diplomacy board game: Treachery is the way to win - which makes it just like the real thing

The addictive nature of Diplomacy

Bullying, betrayal, aggression – it may be just a board game, but the family that plays Diplomacy may never look at each other in the same way again
Lady Chatterley's Lover: Racy underwear for fans of DH Lawrence's equally racy tome

Fashion: Ooh, Lady Chatterley!

Take inspiration from DH Lawrence's racy tome with equally racy underwear
8 best children's clocks

Tick-tock: 8 best children's clocks

Whether you’re teaching them to tell the time or putting the finishing touches to a nursery, there’s a ticker for that
Charlie Austin: Queens Park Rangers striker says ‘If the move is not right, I’m not going’

Charlie Austin: ‘If the move is not right, I’m not going’

After hitting 18 goals in the Premier League last season, the QPR striker was the great non-deal of transfer deadline day. But he says he'd preferred another shot at promotion
Isis profits from destruction of antiquities by selling relics to dealers - and then blowing up the buildings they come from to conceal the evidence of looting

How Isis profits from destruction of antiquities

Robert Fisk on the terrorist group's manipulation of the market to increase the price of artefacts
Labour leadership: Andy Burnham urges Jeremy Corbyn voters to think again in last-minute plea

'If we lose touch we’ll end up with two decades of the Tories'

In an exclusive interview, Andy Burnham urges Jeremy Corbyn voters to think again in last-minute plea