BP share price heads south even as group returns to profit

Fourth-quarter earnings disappoint analysts

BP share price heads south even as group returns to profit

Shares in BP (LON:BP) have fallen deep into the red this morning even as the company disclosed that it had returned to headline profit last year. The group’s fourth-quarter results, however, fell short of analyst estimates.

As of 09:11 GMT, BP’s share price had fallen 2.63 percent to 464.50p, underperforming the benchmark FTSE 100 index which has climbed into positive territory and currently stands 0.55 percent higher at 7,211.54 points. The group’s shares have gained more than 32 percent over the past year, but have lost just under nine percent of their value in the year-to-date.

BP announced in a statement this morning that its headline reported result for the full year was a profit of $115 million, compared with the headline loss of $6.5 billion in 2015, with the 2016 result including a total of $4 billion non-operating charges relating to the 2010 Gulf of Mexico oil spill.

The company further posted underlying replacement cost profits – a measurement allowing for fluctuations in oil prices – of $400 million for its fourth quarter, up from $196 million for the same period in 2015. Reuters, however, notes that the result missed analysts’ estimates of $560 million. The oil major maintained its dividend unchanged at 10 cents per share.

“We have delivered solid results in tough conditions – and are well prepared for any volatility in oil pricing,” BP’s chief executive Bob Dudley commented in the statement. “With our Deepwater Horizon financial liabilities now substantially behind us, BP is fully focused on the future.”

Proactive Investors quoted Laith Khalaf, senior analyst at Hargreaves Lansdown, as commenting that “the pricing environment remains challenging for the oil majors, and while things are looking better than they did a year ago, we’re still a long way short of those halcyon days when oil traded at over $100 a barrel”.

“Indeed BP needs oil to fetch $60 a barrel this year to effectively break even, and with Brent currently trading at around $56, it is still dependent on fair winds from the commodity markets to push it along,” he pointed out.

As of 09:54 GMT, Tuesday, 07 February, BP plc share price is 462.48p.

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