BP lifts dividend by 26% on £8.7bn profits

Oil and petrochemical giant BP has reported profits of £8.7 billion ($16.2 billion) today, up 26% on the previous year, representing the biggest single increase in the group's recent history.

Citing the “strong prevailing circumstances" of the BP Group, along with future investment patterns and the forward trading environment, BP Chief Executive Lord Browne said dividend was up from 7.1 to 8.5 cents per share.

“Thereafter, we would expect to grow the dividend in line with our view of future sustainable performance. We estimate that this level of dividend allows us to maintain prudent earnings cover even if oil prices went down to $20 dollars a barrel,” he said.

Commenting on BP’s record profit for 2004, Lord Browne said the company was in a "strong financial condition". Post-tax cash flow for the year totalled $24 billion, a rise of 42% from 2003.

He added: “Our strategy is on track and unchanged, our operations are in line with our previous indications, and we have a strong base of material assets and markets for a sustainable future.”

In Exploration and Production, he said that on a UK GAAP basis the company had more than replaced annual output for the 12th year running – by 106% for the Group and 110%, including equity-accounted entities such as in Abu Dhabi and TNK-BP.

Major discoveries were made in Egypt, Sakhalin, the deepwater Gulf of Mexico, Trinidad and Angola, adding more than one billion barrels of oil equivalent to BP’s resource base over the year.

However, production, mainly at Alaskan and the North Sea sites, showed a net decline of between 4.5 and 5%. This trend is expected to continue at an annual average rate of 3% to 2008. Though BP said that this was offset by a rise in output from new profit centres to over one million barrels a day of oil equivalent – a figure "likely to increase substantially" in 2005.

Overall, production as a whole grew by 11% in 2004 and output for 2005 is forecast to hit 4.1 million to 4.2 million barrels a day of oil equivalent before divestments, keeping BP on track to average annual production growth in excess of 5% for the period 2004-2008.

(SP)