BP figures disappoint as Deepwater Horizon costs continue to bite

Oil giant BP (LON:BP) reported a lower-than-expected set of figures for the fourth quarter, disappointing investors and sending shares lower.

Earnings hit a ten-year low for the fourth quarter of 2016, with the group’s underlying replacement cost profit, used to measure net income, falling to $400 million. Despite being an improvement on last year’s figures, it remains well below the $560 million analysts were expecting.

For the full year of 2016 the RC loss was $999 million, compared with a loss of $5,162 million for the full year of 2015.

The company continued to be hit by ongoing costs from the 2010 Deepwater Horizon oil, but chief executive Bob Dudley added that, “With our Deepwater Horizon financial liabilities now substantially behind us, BP is fully focused on the future.”

If all liabilities from the Deepwater Horizon spill are included, BP lost almost $1 billion in 2016.

“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,” Dudley added.

Laith Khalaf senior analyst at Hargreaves Lansdown told the BBC:

“BP needs oil to fetch $60 a barrel this year to effectively break even, and with Brent currently trading at around $56, it is still dependent on fair winds from the commodity markets to push it along.

“BP continues to pay out a quarterly dividend of 10 cents, which works out at an annual yield of almost 7 percent.

“One worrying aspect of the dividend is the colossal amount being paid out in shares rather than cash, which increases the number of mouths to feed next time a payment is made.

The results differentiate BP fro competitors including Royal Dutch Shell and Exxon Mobil, who are now breaking even, with BP unlikely to achieve this status until the end of the year.

BP shares are currently trading down 2.59 percent at 464.18 (1015GMT).