BP profits doubled in the fourth quarter of 2016. Underlying replacement cost profit, BP’s preferred measure, rose to $400 million in the last three months of 2016 from $196 million for the same period in 2015.
The British oil giant benefited from higher oil prices and more cost-cutting, offset by weaker refining margins and higher turnarounds in downstream operations.
Despite a recovery in profits, the figure was lower than what analysts had forecast. Analysts had estimated underlying replacement cost profit of around $560 million.
Shares in BP to dropped by 16.62 points, or 3.49%, on Tuesday – closing at 459.93.
For the full year, annual profits in 2016 dropped to their lowest level in at least a decade, down to $2.59 billion, from $5.90 billion in 2015.
Bob Dudley, BP group chief executive, said in a statement that ‘2016 was the year we made significant strides in creating a stronger platform for growth.’
The costs and liabilities from the fatal Deepwater Horizon oil platform disaster were “now substantially behind us. BP is fully focused on the future,” he added.
“We have delivered solid results in tough conditions – and are well prepared for any volatility in oil pricing. We have adapted by cutting our controllable cash costs by $7 billion from 2014 – a full year earlier than planned. Continued tight discipline on costs remains essential. Everything we have done during the year has made us a more resilient and competitive company.”
“We start this year with considerable momentum – and a sense of disciplined ambition. We have laid the foundations for BP to be back to growth.”
BP now anticipates balancing its organic sources and uses of cash by the end of 2017 in a Brent oil price environment of around $60 a barrel.
“Looking beyond this year, we expect organic free cash flow to grow into the medium term, supported strongly by the ramp-up of production from new Upstream projects, strong marketing growth and the positive impact of these portfolio additions,” said Brian Gilvary, BP chief financial officer.