BP Posts $3.3 Billion Loss on Lower Oil Prices

BP, the second-largest European oil company, said Tuesday it swung to a steep loss of $3.3 billion during the fourth quarter of 2008 as sliding oil prices hit revenues hard.

The company's loss during the October-December period was well below the $8 billion profit in the third quarter and a $4.4 billion profit in the same period in 2007.

Pat Sullivan / AP

For the full year, BP said net profit was $21.2 billion, up slightly on 2007's $20.8 billion.

The drop in the fourth-quarter performance was due to the collapse in oil prices. In mid-July, oil prices were around $147 a barrel. Since then, fears about the global economic outlook have pushed oil prices down to around $40 a barrel.

When oil price changes on unsold inventories are stripped out, BP remained in the black during the fourth quarter. So-called replacement cost profit — a key measure for oil companies — was $2.6 billion in the fourth quarter of 2008, down on 2007's equivalent of $3.4 billion.

Though the replacement cost profit during the period was hefty, it was at the bottom end of market expectations. Analysts were looking for replacement cost profit to be around $3 billion during the quarter.

BP blamed currency changes, in particular the fall of the euro and the pound against the dollar, as well as higher tax bills in Russia, for the weak performance. In addition, the company said it took a $700 million one-off loss related to its Russian joint venture, TNK-BP, which was dogged by political infighting last year.

For the year as a whole, replacement cost profit rose 39 percent to a record $25.6 billion.

BP said it will pay a quarterly dividend of 14 cents a share. Though that was up on the 13.25 cents delivered a year ago, the dividend was unchanged on the previous two quarters.

The markets gave a thumbs down to BP's results, sending the shares down as much as 5 percent at one stage. By mid-afternoon London time, BP's share price was 1.3 percent lower at 478.50 pence.

CONTINUED : 'Temporarily Lost Its Way'

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