BP hoping for profit after second year in the red

BP group CEO Bob Dudley says the business is set for growth this year
BP group CEO Bob Dudley says the business is set for growth this year

Oil giant BP has remained in the red for a second year in a row, but said it hopes 2017 will be its turnaround year amid a bounce back in crude prices.

The group posted replacement cost losses of $999 million (£803m) for 2016 as it said oil prices remained “challenging”, with the average for Brent crude standing at $44 a barrel - the lowest for 12 years.

A year-end bounce back in oil prices, which have recovered above $50 a barrel, helped it claw its way out of the red, with Q4 profits of $72m (£58m) against losses of $2.2 billion (£1.8bn) a year earlier.

On an underlying basis, Q4 replacement cost profits more than doubled to $400m (£322m) from $196m (£158m) a year earlier.

But shares in BP - a mainstay of pension funds - fell 2% as this fell short of City forecasts for around $560m (£450m) in the fourth quarter.

Bob Dudley, BP group chief executive, said the business was set for growth this year as it comes out of a recent “trough” caused by the oil price slump and as it moves on from the mammoth cost of the Deepwater Horizon oil spill of 2010.

“With our Deepwater Horizon financial liabilities now substantially behind us, BP is fully focused on the future.”

“We start this year with considerable momentum - and a sense of disciplined ambition. We have laid the foundations for BP to be back to growth,” he added.

BP revealed the total bill for the Gulf of Mexico tragedy had surged to 62.6 billion US dollars (£50.4 billion), with another 625 million US dollar (£504 million) pre-tax charge taken in the fourth quarter.

The group said compensation and settlements payments this year are set to be lower at around $4.5bn (£3.5bn) to $5.5bn (£4.4bn), before falling sharply to around $2bn (£1.6bn) in 2018 and to a little over 1 billion US dollars (£806 million) a year from 2019.