Despite suffering from 18 months of safety problems, British Petroleum has delivered a record profit for 2006. However, safety costs did force a reduction in fourth quarter profit.
Using the preferred replacement cost profit method, 2006 profit was $22,253 million, a 15% rise on profit of $19,314 million in 2005. The strong showing was driven by continuing strong oil prices and demand, as well as healthy refining margins.
However, BP’s fourth quarter income fell 12% when compared to the last three quarters of 2005 as the company felt the financial impact of dealing with the 2005 explosion at its Texas City refinery and the 2006 supply line problems on its Alaskan pipelines. Q4 profit came in at $3,895 million compared to $4,432 million in 2005.
BP chief executive Lord Browne said: The fourth quarter result reflects the recent declines in the overall price and margin environment, as well as operational factors and increased safety and integrity investments. Our record full year replacement cost profit and operating cash flow supported the group’s capital program and increased dividends and share buybacks. We remain committed to addressing the recent operational issues while executing our strategy with discipline and focus.
Despite achieving record annual profit, BP’s trials have left it trailing UK rival Shell.