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BP's $4.9bn loss - first in 20 years

posted 1 Feb 2011, 09:08 by Mpelembe Admin   [ updated 1 Feb 2011, 09:10 ]
BP has failed to report a profit for the first time in nearly 20 years, announcing a loss of £3.1 billion for 2010 due to the Gulf of Mexico oil spill, but it is returning to paying a dividend.
UK-BP DIVIDENDS - For the first time in almost two decades - BP has failed to make an annual profit.

A new charge for the oil spill in the Gulf of Mexico meant the British oil major made a loss of £3.1 billion for 2010.

The loss contrasts sharply with the £13.9 billion profit it made the year before

So far cleaning up the environmental disaster in the Gulf - and compensating those affected - has cost BP over £25 billion.

BP's shares initially fell almost 2%, before bouncing back slightly, says Manoj Ladwa from ETX Capital.

Manoj Ladwa, Senior Trader, ETX Capital, saying:

"It's been relatively well-received. We've seen the share price come off a little bit today, but then it's moved up from just above three quid all the way up to five pounds, where it is trading at the moment, so relatively well-received, it could have been a lot worse."

Despite the loss, BP has returned to paying a dividend - paying 7 cents a share for the previous quarter.

That's less than before the oil spill - but still welcome news for many pension funds which rely on dividends like BP's.

Manoj Ladwa says investors should be glad to hear that BP is restructuring.

Manoj Ladwa, Senior Trader, ETX Capital, saying :

"It's becoming leaner and meaner machine. It's getting rid of two refineries out in Texas and it's moving away from that area, it's relying less on U.S. business in order to remain profitable and it's looking at other markets such as Russia. So it's becoming more of a speculative company, we could see more volatility with regards to the share price, but overall I think it's going to do relatively well."

But forays into Russia are already causing BP problems.

It's just signed a deal with Rosneft, Russia's state-controlled oil firm, which has upset BP's other Russian partners TNK-BP.

TNK's shareholders are seeking an injunction against the agreement with Rosneft.

BP is trying to sound optimistic about settling the dispute - CEO Bob Dudley has suggested TNK-BP could get involved in the Rosneft deal.

But there's no guarantee they'll buy that idea - BP clearly has much work to do before it can report record profits again.

Joanna Partridge, Reuters

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