BP says good-by to Texas City

Thanks to my Twitter buddy, Mike Boudreaux, we have the following news via the Houston Chronicle and AP:

BP will sell Texas City refinery

LONDON — BP announced Tuesday it is resuming dividends for the first time since the Gulf of Mexico well disaster, even as a 30 percent gain in fourth-quarter profits failed to keep it from booking its first full-year loss since 1992.

BP, whose $5.6 billion net profit in the fourth quarter was larger than expected and boosted by higher oil prices, raised to $40.9 billion its estimate for the cost of the Gulf oil spill. The charge covers the cost of the explosion aboard the Deepwater Horizon rig, which killed 11 workers in April, as well as plugging the well and cleaning up the southern U.S. coast. BP said the final total "is subject to significant uncertainty."

The company also announced plans to almost halve its refinery presence in the U.S. by selling two facilities, including the Texas City refinery where 15 workers died in a massive explosion in 2005.

BP, which suspended dividends following the Macondo well blowout in the Gulf of Mexico in April, said it would pay out 7 cents per share, or about $1.25 billion over all — half the amount paid in the fourth quarter of 2009.

"We believe now is the right time to resume payment of a dividend to our shareholders," said Chairman Carl-Henric Svanberg.

"We have chosen a prudent level that reflects the company's strong underlying financial and operating performance but also recognizes the need to fully meet our obligations in the Gulf of Mexico and to maintain financial flexibility."

The company's fourth quarter profit was up from net earnings of $4.3 billion a year earlier. However, for the full year BP booked a loss of $3.7 billion compared with a profit of $16.6 billion in 2009.

Replacement cost profit — a closely watched industry measure which reflects inventory gains and losses — was $4.6 billion for the quarter, up from $3.4 billion a year earlier. For the full year BP saw a replacement cost loss of $4.9 billion, compared with a profit of $14 billion in 2009.

BP PLC shares were down 2.9 percent at 482 pence in early trading on the London Stock Exchange.

"The market may be slightly underwhelmed by the lack of a more radical restructuring plan but with Macondo still an ongoing issue it may be too early for BP to implement more radical plans," said Richard Griffith, analyst at Evolution Securities.

BP did not say how much it expected to gain from the sale of its U.S. refineries. It said it had spent more than $1 billion modernizing the Texas City plant, but noted it "lacks strong integration into any BP marketing assets." However, BP said it will keep the chemicals complex at Texas City.

The company said it also hopes to sell the Carson refinery near Los Angeles along with its marketing business in southern California, Arizona and Nevada. The company plans to concentrate its U.S. refining and marketing activity at Whiting, Indiana and Cherry Point, Washington, as well as in its 50 percent stake in the Toledo, Ohio facility.

"2011 will be a year of recovery and consolidation as we implement the changes we have identified to reduce operational risk and meet our commitments arising from the spill," said BP Chief Executive Bob Dudley. "But it will also be a year in which we have the opportunity to reset the company, adjusting the shape of our business, and focus on growing value for shareholders."

Meanwhile, BP's lawyers were due in court in London on Tuesday to contest a challenge to the company's ambitious plans to explore for offshore oil in the Arctic with its new Russian partner, Rosneft.

BP's current Russian joint venture, TNK-BP, is seeking an injunction to block the deal on grounds that it violates their agreement. TNK-BP now accounts for a quarter of BP's oil production.

BP's Russian partners in the AAR consortium, which owns the other half of TNK-BP, on Monday voted against a $1.8 billion dividend payout for the fourth quarter, a move that would deprive BP of $900 million.

In the Gulf of Mexico, BP said activity has been winding down since no significant volume of oily liquid has been recovered from the Gulf since July 21, and 98.8 percent of the waters formerly closed to fishing had been reopened. The number of people employed on the cleanup had dropped from 20,000 to about 6,200, BP said.

As of this weekend, about 91,000 people and businesses had filed for final settlements of claims from the $20 billion fund, administered by Washington lawyer Kenneth Feinberg. Thousands of people have received some money to tide them over until a final settlement amount is offered, but only one has been fully paid — a $10 million claim which BP called a unique situation.
 

 

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