BP saw its fourth quarter and full year results improve as the company’s upstream segment a posted year-over-year gain.
The company reported a $497 million profit for the fourth quarter of 2015, up significantly from a loss of $3.3 billion in the prior-year quarter.
The company’s full year 2016 profit rose to $115 million compared to a full year loss of $6.48 billion in 2015.
Fourth quarter replacement cost profit came in at $72 million, down from $1.66 billion in the prior quarter but up from a loss of $2.23 billion a year ago.
Full year replacement cost profit fell to a loss of $999 million compared to a loss of $5.16 billion for the full year 2015.
Fourth quarter underlying replacement cost (RC) profit rose to $400 million, up from $196 million in the year-ago quarter.
Full year 2016 underlying replacement cost profit fell to $2.58 billion, down from $5.9 billion in 2015.
BP said that non-operating items for the fourth quarter and full year reflect additional provisions recorded in relation to the Deepwater Horizon spill.
Non-operating items also included a restructuring charge of $195 million for the fourth quarter and a $763 million charge for the full year.
Cumulative restructuring charges from the beginning of the fourth quarter 2014 totaled $2.3 billion by the end of the fourth quarter 2016, BP said.
BP added that all amounts, including finance costs, relating to the Gulf of Mexico oil spill have been treated as non-operating items, with a pre-tax charge of $799 million for the fourth quarter 2016 and $7.13 billion for the full year.
BP said it is “moving towards completion of the process for resolving Business Economic Loss (BEL) claims arising from the 2010 oil spill and amounts to resolve remaining claims are expected to be substantially paid in 2017.”
BP said that, in 2017, cash payments related to the spill are expected to be lower than in 2016, at around $4.5 to 5.5 billion.
The company expects the payments to fall to around $2 billion in 2018 and to a little over $1 billion a year from 2019.
Net cash provided by operating activities for the fourth quarter 2016 was $2.4 billion, down from $5.8 billion in the prior-year quarter.
Full year 2016 net cash provided by operating activities was $10.7 billion, down from $19.1 billion for the prior year.
Fourth quarter upstream RC profit before interest and tax rose to $692 million, up from a loss of $2.28 billion in the prior-year quarter.
Full year 2016 upstream RC profit improved to $574 million compared to a loss of $937 million in 2015.
Downstream RC profit ticked up to $899 million in the fourth quarter of 2016, up from $838 million a year ago.
Full year 2016 downstream RC profit fell to $5.16 billion from $7.11 billion for 2015.
Fourth quarter RC profit tied to BP’s stake in Rosneft dipped to $158 million, down from $235 million in the year-ago quarter.
Reported production for the fourth quarter, including BP’s share of Rosneft’s production, was 3.338 million barrels of oil equivalent per day (mmboe/d), compared with 3.342 mmboe/d for the same period in 2015.
Full year 2016 report production was 3.268 mmboe/d compared to 3.239 mmboe/d in 2015.
Capital expenditure on an accruals basis for the fourth quarter 2016, excluding amounts relating to the renewal of a 10 percent stake in the Abu Dhabi onshore oil concession was $5.1 billion, compared with $6.1 billion for the year-ago period.
Full year organic capital expenditure, excluding the amount tied to the Abu Dhabi concession, fell to $16 billion compared to $18.7 billion in 2015.
“Looking beyond this year, we expect organic free cash flow to grow into the medium term, supported strongly by the ramp-up of production from new Upstream projects, strong marketing growth and the positive impact of these portfolio additions,” BP chief financial officer Brian Gilvary said.