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BP net profits double in 2013 on Rosneft boost

BP's net profit more than doubled last year, boosted by a stake in Russian oil giant Rosneft, but the British energy major faltered in the fourth quarter, it said on Tuesday.

LONDON: BP's net profit more than doubled last year, boosted by a stake in Russian oil giant Rosneft, but the British energy major faltered in the fourth quarter, it said on Tuesday.

Earnings after tax jumped to $23.45 billion (17.33 billion euros) last year.

That compared with $11.01 billion in 2012 when performance was skewed by huge fines arising from the 2010 US oil spill catastrophe, BP said in a results statement.

"BP delivered strong operating performance throughout 2013, with increased asset reliability and major project delivery in both our upstream and downstream businesses," said chief executive Bob Dudley.

However, net profits sank by 30 percent to $1.04 billion in the three months to December from the level a year earlier, hit by lower refining margins and lost income from divestments needed to pay for the oil disaster.

BP - seeking to reposition itself after the Gulf of Mexico oil spill - agreed in 2012 to sell Rosneft its 50-percent stake in joint venture TNK-BP in a cash-and-shares deal that gave it a near 20-percent stake in the Russian giant.

The London-listed company also reported that its underlying replacement cost profit, excluding income from selling the TNK-BP share and other exceptional items, slid 21 percent to $13.42 billion last year.

This earnings measure - which strips out also fluctuations in the value of inventories - sank by a third to $2.8 billion in the fourth quarter.

"Both the fourth quarter and full year 2013 underlying results were affected by: the significant impact of BP's major divestment programme; weaker refining margins; and higher depreciation and exploration write-offs as the group brought new projects online and increased its investment in exploration," BP said in the earnings release.

"The impacts of these were partially offset by strong growth in underlying oil and gas production, particularly from key regions such as the North Sea, Angola and Gulf of Mexico.

"The fourth quarter's result also benefited from higher earnings from Rosneft than reported from TNK-BP in the fourth quarter of 2012," it added.

Oil production stood at 3.2 million barrels of oil equivalent in the fourth quarter, including BP's share of Rosneft.

BP said that its output, excluding Rosneft, fell by 1.9 percent to 2.25 million bpd, due to a string asset sales aimed at raising cash to meet the clean-up bill for the oil spill.

The group also upgraded its estimate of the total bill arising from the Gulf of Mexico disaster to $42.7 billion, citing an increased provision for legal and clean-up costs. That was $200 million higher than prior guidance.

"Although we continue to lack visibility over the group's final liability regarding the Gulf of Mexico oil spill, we remain positive on the shares," said Jonathan Jackson, head of equities at brokerage Killik & Co, adding that the main driver of the share price was the flow of news about the oil spill.

BP has sold assets worth $38 billion to meet the clean-up bill.

The energy major had revealed in October that it would seek to offload another $10 billion of assets by the end of 2015. It has so far agreed to extra divestments totalling about $1.7 billion.

BP has been blighted by the fallout from the devastating blast on the BP-leased Deepwater Horizon drilling rig on April 20, 2010, which killed 11 people and unleashed about 4.9 million barrels of oil into the Gulf.

On Tuesday, BP's share price slid 1.66 percent to stand at 465.73 pence in afternoon deals on the London stock market, which was down 0.35 percent.

The group's results buoyed investors one week after rival Royal Dutch Shell posted a 39-percent slump in annual net earnings.

Shell's dire performance was preceded by a profits warning that blamed high exploration costs, pressures across the oil industry, and disruption to Nigerian output.

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