* Oil spill bill hits $43 bln, Macondo field valued at $400
* Q4 underlying profits up 14 pct year on year
* Dividend increased to 8 cents a share from 7 cents
* Output down, outlook weak
* Shares down 1.3 pct, underperforming sector
By Tom Bergin
LONDON, Feb 7 BP ratcheted up the
rhetoric around multi-billion dollar claims from the Gulf oil
spill by warning it would "vigorously" contest lawsuits over one
of the world's worst environmental disasters.
While reiterating BP's "bias for settling" at hearings
scheduled later this month, CEO Bob Dudley said he would only do
so "on fair and reasonable terms."
As he unveiled higher fourth quarter profit on Tuesday and a
rise in the dividend, which he said showed BP was putting the
spill behind it, Dudley acknowledged the lawsuits were the
biggest uncertainty facing the British oil major.
"We have many people who do say, we are interested in
investing in BP but not until all this is behind you," he told a
BP faces 600 civil lawsuits from people in states as far
away as South Carolina and Kentucky, as well as litigation from
the U.S. government.
"We always have had this bias toward settling and moving on,
and reducing uncertainty," Dudley said.
But he added; "We are preparing vigorously for trial. We
have confidence in our case."
Analysts at Morgan Stanley have predicted BP will agree to
pay the U.S. government $20-$25 billion in the coming weeks to
settle fines and natural resources damages but Alastair Syme,
oil analyst at Citigroup, said he expected the case to go to
trial as planned on Feb. 27.
BP, Europe's second-largest oil company by market value,
also lifted its estimate of the total cost of the United States'
worst-ever offshore oil spill by $1.8 billion to $43 billion due
to higher costs for shoreline clean up, which BP said was now
largely complete, and a new $500 million charge for legal fees.
By contrast, BP's statement showed the company has valued
the doomed Macondo prospect at just $400 million.
The disaster forced a major restructuring at London-based BP
but Dudley said the group was returning to growth and that 2012
would be a "year of milestones", after a "year of consolidation"
Underscoring its confidence, BP increased its quarterly
dividend to 8 cents a share from 7 cents, backed by strong
cashflows due to higher oil price.
"It is a good sign of confidence in the improving
operational performance," said Tony Shepard, oil analyst at
BP's 14 cents a share quarterly payout was cut at the height
of the spill, and reintroduced at half that level in 2011.
OUTPUT FLAT, MORE CAPEX
BP said its replacement cost (RC) net profit rose 65 percent
compared with the same period last year, to $7.61 billion in the
quarter, boosted by a $4 billion contribution from Anadarko
Petroleum, which had a stake in Macondo, towards clean up costs.
Stripping out one-offs, the result rose 14 percent to $4.99
billion, in line with an I/B/E/S consensus forecast of $4.89
Rival Royal Dutch Shell Plc reported an 18 percent rise in
underlying profit in the quarter while industry leader Exxon
Mobil only managed a 2 percent rise.
Replacement cost profit excludes gains or losses related to
changes in the value of fuel inventories and so is comparable
with net income under U.S. accounting rules.
BP's muted increase was despite an unusually low tax rate,
higher gas prices and a 26 percent rise in the Brent crude price
in the quarter compared to the same period of 2010.
Lower production weighed on the fourth quarter result, with
assets sales, in part to help pay for the oil spill, pushing
output down 5.1 percent to 3.49 million barrels of oil
equivalent per day in the quarter.
Dudley said he expected output to fall further in 2012,
despite investor hopes that BP's smaller asset base would
facilitate higher growth.
Echoing a trend across the sector, BP said it was lifting
its capital expenditure budget for 2012, as it invests more in
exploration and production.
Some analysts have questioned whether the additional
spending will generate the same returns oil giants like BP,
Shell and Exxon have enjoyed in the past.
Dudley said that, over time, upstream oil and gas assets
offered returns of around 15 percent, and that the expected this
to continue going forward.
In the latest sign the British oil group is getting back to
business in the Gulf of Mexico, BP said it had sanctioned
a major new project in the area .
BP shares traded down 1.3 percent at 483 pence at 1040 GMT,
lagging a 0.6 percent drop in the STOXX Europe 600 Oil and Gas
BP said over $5 billion of contributions from its partners
in the blown-out well, Anadarko and Japan's Mitsui, meant it
would be able to end its own payments into a $20 billion
compensation fund in 2012, a year earlier than expected.