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Profits of BP (LSE:BP.) for the first quarter of the year fell almost a fourth compared to the same period in 2013 but the oil giant announced it will issue quarterly dividend higher than a year ago, the London-listed firm said early Tuesday.
In a statement, BP posted US$ 3.2 billion for the January – March period, US$ 1 billion lower, or 23.8 percent, than that in the comparative period in 2013, which was at US$ 4.2 billion. Said figure, nonetheless, was US$ 400 million higher than the previous quarter’s US$ 2.8 billion.
Despite the decline, the company will be giving 9.75 US cents quarterly dividend per ordinary share, 8.3 percent higher than last year’s. BP explained the company’s divestment program and higher cost contributed to the decline in profit.
“Compared to a year ago, the result was affected by the impact of divestments and higher non-cash costs,” it said.
BP said the result included a write-off of its 105,000 acres Utica shale interest in Ohio, United States, as it decided not to continue with its plans to develop the Utica shale.
The company said it is now US$ 7 billion short of accomplishing its US$ 10 billion divestment program by 2015. It said has divested some US$ 3 billion worth of assets, including those in Alaska.
Solid Start
Bob Dudley, Group Chief Executive of BP, points to the first quarter of 2014 as a solid start, emphasizing that the group amassed US$ 8.2 billion operating cash flow with successes in exploration and newly established upstream projects.
“We remain confident of delivering our 10-point plan targets that we set in 2011 for delivery in 2014,” Dudley commented.
“We expect material growth in operating cash flow, coupled with disciplined investment, to deliver sustainable growth in free cash flow. This will support increasing distributions to our shareholders. As well as progressive growth in the dividend per share, we expect to use surplus cash to support further distributions through share buy-backs or other mechanisms,” Dudley announced on Tuesday.
Russia and Rosneft
BP’s pre-tax profit from its interest in Russia’s state-controlled Rosneft, where the former owns 19.75 percent interest was US$ 271 million, more than treble last year’s US$ 85 million.
On Monday, BP said it is committed to hold on to its interest in Rosneft even as new US sanctions targeting people close to Russian President Vladimir Putin included Rosneft’s Chief Executive, Igor Sechin.
BP shares fell one percent to 488.35 pence at the close of trading in London on Monday following the announcement. At 8:53 AM GMT, shares were up 0.9 percent to 492.60 pence, an hour after trading opened.
