BP failed to dispel doubts about its future today as its long-awaited return to a dividend payout was tainted by weaker than expected profits and a new charge for the Gulf of Mexico oil spill.
The shares dropped 1.9 per cent to 476 pence by 9.21am, putting it among the biggest losers in the blue-chip FTSE 100 index.
BP held out the prospect of long-term growth via new exploration partnerships and a fresh focus on getting oil and gas out of the ground, but this was overshadowed by a court hearing due later today at which the company's partners in TNK-BP will seek an injunction to block BP's planned Arctic exploration joint venture with Russian state-controlled Rosneft.
"The company has clearly pinned its hopes on Russia, but the new JV has already gone wrong, antagonising the TNK-BP partners ... There remains substantial uncertainty surrounding the company," said Dougie Youngson, analyst at Arbuthnot Securities.
BP said it would pay a fourth-quarter dividend of 7 cents per share and 42 cents per American depositary share - in line with analysts' expectations, but only half of what it was paying before the spill disaster.
"The re-introduction of the dividend is good news for investors (even at its much lower level), but it is likely to prove inflammatory to US Gulf Coast senators whose communities are still being impacted by the spill," Mr Youngson said.
BP said fourth-quarter replacement cost (RC) net income was $4.61 billion, as a big rise in oil prices outweighed a 9 per cent drop in oil and gas production.
Excluding one-off items of $250 million, RC net income came in at $4.36 billion, behind the $5.09 billion average forecast given by nine analysts polled by Reuters. RC net income excludes gains or losses related to changes in the value of oil inventories and as such is comparable with US net income.
BP said the weaker than expected results were partly due to a higher than expected tax rate.
The company also flagged that the pain from the oil spill continued to be felt, adding another $1 billion to its earlier $40 billion estimate of the total bill. Analysts had recently started to cut their estimates of the oil spill bill.
Offering a pointer to future growth, BP said it would sell two refineries in the United States, halving its capacity there, and invest more in oil and gas exploration.
It said it would increase significantly its investment in exploration and would seek new partnership opportunities.
It said it was on track to meet its target of up to $30 billion of divestments by the end of 2011.
Reuters