BP hits production target but expects a tougher year

The oil giant BP met its target to grow production by 5.5 per cent last year and said it saw a lower-than-expected tax rate in the fourth quarter.

The tax news led analysts at Lehman Brothers to add up to $200m (£140m) to forecast earnings for the last three months of 2001.

However, the broker noted that "the improvement is low quality as the lower [tax] rate is not sustainable". BP made just over $3bn net profit in the third quarter.

BP said the fourth quarter tax rate is expected to fall to around 20 per cent, compared with 25.5 per cent in the third quarter and 28 per cent in the fourth quarter last year.

Elsewhere, the BP statement summed up much tougher trading conditions than the oil industry became used to during the oil price boom times of 2000 and early last year.

Nevertheless, the industry continues to operate at very profitable levels with crude prices still well above their mid-cycle assumptions of $16 a barrel.

BP said crude prices averaged some $6 a barrel less in the fourth quarter than the third, with the benchmark North Sea Brent price below $20 a barrel.

Oil refining margins also dropped by some $1.60 a barrel while US gas prices, to which BP has a higher exposure than its European rival Shell, were hit by higher storage levels and weaker demand.

BP confirmed that its oil and gas output grew 5.5 per cent for the year, at the bottom of its target range of 5.5 to 7 per cent, and said current refining margins were "very weak".

Although output grew just 3 per cent in the fourth quarter, it reached a record level of some 3.5 million barrels of oil equivalent a day.

BP is scheduled to present full-year financial figures on 12 February. Its shares closed down 1.5p at 522.5p.