BP hikes divi as profits jump - UPDATE

7th Feb 2012 07:02

Oil titan BP has announced a 14% increase in its quarterly dividend to eight cents per share, the first rise since the company resumed payouts a year ago, in the hope that it can put the 2010 Gulf of Mexico (GoM) oil spill behind it. The company announced that replacement cost (RC) profit (excluding inventory holdings gains/losses) was $7,606m in the fourth quarter of 2011, taking the full-year figure to $23,900m, compared with a loss of $4,914m in 2010. Sales and other operating revenues totalled $93,441m in the fourth quarter, up from $79,703m the year before. Full-year revenues jumped from $297,107m to $375,517m.Following BP's "turning point" in October - in which it promised to build a stronger and safer company, selling off low-returning assets and investing in higher-growth opportunities - oil and gas production increased by 170,000 barrels of oil equivalent a day (boed) from the third to the fourth quarter, a rise of over 5%.Full-year production averaged 3.45m boed, ahead of the 3.4m boed target. However, underlying production (excluding TNK-BP) is expected to be broadly flat in 2012."2012 will be a year of increasing investment and milestones as we build on the foundations laid last year," said Chief Executive Bob Dudley. "As we move through 2013 and 2014, we expect financial momentum will build as we complete payments into the Gulf of Mexico Trust Fund, restore high-value production and bring new projects on stream," he said. BP made $5.3bn of contributions to the GoM fund during the period, including a $4bn cash settlement from Anadarko Petroleum. Total trust contributions for 2011 stood at $10.1bn. BP assures that it has resolved over 90% of government claims since the oil spill.Operating cash flow generated by BP rose 63% in 2011 to $22.2bn and Dudley said that net cash flow in 2014 - in a $100 oil price environment - would be around 50% higher than this. "Half of the additional cash is expected to be used for re-investment and half for other purposes including increased shareholder distributions," BP said.Net debt at the end of the fourth quarter was $29bn, up from $25.9bn the year before. The ratio of net debt to net debt plus equity fell from 21.2% to 20.5% and the firm intends to cut this to the lower half of the 10-20% range "over time"."We believe this resulted in more new net acreage than accessed by any of our peers in 2011. We now have a robust pipeline of opportunities with exploration prospects that will generate new resources and projects well into the next decade. We will see a continued ramp up of exploration over the next two to three years," Dudley said.Despite an earlier rise, BP's shares were down 0.55% at 486.85p in mid-morning trade.BC