BP ups dividend despite profit drop

 
Harriet Green
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As it continues to press on with its turnaround programme, BP has reported that profit fell 24 per cent to $3.2bn (£1.9bn) in the first quarter - that's slightly ahead of the $3.1bn consensus forecast, though, and on the back of weaker production.

It’s upping its quarterly dividend by 8.3 per cent to 9.75 cents per ordinary share - the second increase in six months, following a pledge to do so.

Before tax, profit improved to $5.3bn - from $1.2bn in the fourth quarter. That’s down 73 per cent from a year earlier, reflecting the $12.5bn boost the oil giant received from its disposal of its interest in TNK-BP in Russia at the beginning of last year.

Higher costs, exploration write-offs and the lower production were partly offset by a stronger performance in gas, BP said. Production dropped 8.5 per cent to 2.1bn barrels of oil equivalent from a year earlier.

Having announced, in October 2013, plans to shed a further $10bn of assets before the end of 2015, it says it’s agreed around $3bn of such divestments to date, with proceeds accounting for $1bn in the quarter. Over the past few years, the company’s sold nearly $40bn of assets.

It says it paid out 39m in the quarter in relation to the 2010 Gulf of Mexico oil spill.

BP says it expects second quarter profit to be lower than the first, as it continues to plough on with its turnaround, particularly in the North Sea and Gulf of Mexico. The hit won’t, however, be as great as the one seen in the second quarter of last year, it added.

With analysts remaining cautious when it comes to stock, BP has 20 hold ratings on its shares, out of the 36 institutions that cover it.