BP, London, reported full-year underlying replacement cost profit of $10.0 billion for 2019, a 21% drop from 2018 but higher than expectations. Underlying replacement cost profit for the fourth quarter was $2.6 billion compared to $3.5 billion for fourth-quarter 2018 and $2.3 billion in third-quarter 2019. Reported profit was $19 million for the fourth quarter and $4.0 billion for the full year.
Compared to the third quarter, the result benefits from a lower effective tax rate, higher production due to improved weather in the Gulf of Mexico, and strong commercial performance in refining. This was partly offset by a lower Rosneft contribution following a strong third quarter, and lower refining margins.
Compared to a year ago, the result was impacted by lower heavy crude differentials and lower liquid and gas realizations, partly offset by a lower effective tax rate and lower refinery turnarounds.
BP repurchased 235 million ordinary shares at a cost of $1.51 billion for the full year. Gulf of Mexico oil spill payments for the year totaled $2.4 billion on a post-tax basis and are expected to be less than $1 billion in 2020.
Excluding oil spill related outgoings, underlying operating cash flow was $28.2 billion for the year, of which $7.6 billion was generated in the fourth quarter. This included a working capital release of $300 million for the year, and a build of $200 million in the fourth quarter. Organic capital expenditure was $4.0 billion in the fourth quarter and $15.2 billion for the year, at the lower end of the guided range.
Divestments and other disposals announced since the start of 2019 now total $9.4 billion. BP expects to reach $10 billion in divestment and disposal proceeds by yearend. The company expects to announce a further $5 billion of agreed disposals by mid-2021.
BP’s Lower 48 business, BPX Energy, reported liquids production of 124,000 b/d for the year, up from 55,000 b/d a year ago, with capital expenditures of $1.94 billion. In 2018, BP acquired the US unconventional assets of BHP for $10.8 billion (OGJ Online, July 27, 2018; Oct. 31, 2018). The segment operated 13 rigs for the year, 7 of which were in the Eagle Ford in the year’s fourth quarter.
Upstream production for the full year was 2.637 MMboe/d, excluding Rosneft—3.8% higher than 2018.
Bob Dudley has stepped down as CEO, effective Feb. 1. He is succeeded by Bernard Looney, who has run BP’s upstream business since April 2016 and has been a member of the firm’s executive management team since November 2010 (OGJ Online, Oct. 4, 2019).