BP turns corner after spill disaster

BP has turned the corner after the Gulf of Mexico disaster, its chief executive said yesterday, predicting the British oil company would now return to output and cashflow growth and rejecting calls for a fundamental restructuring of the group. Europe's second-largest oil group by market capitalisation said its cashflow would be 50 per cent higher by 2014, and that it could could boost dividends and restart share buybacks as early as February. BP's shares were up 3.6 per cent at 454 pence at 11.51 GMT, outperforming a 1.3 per cent rise in the STOXX Europe 600 oil and gas sector index . However, some analysts said it was too soon to say that the turnaround was complete. "These are welcome moves but BP needs to map out how it will grow upstream volumes [oil and gas production]," Oswald Clint, oil analyst at Bernstein, said in a research note. Analysts at Citigroup also said the cashflow growth target was not as impressive as it appeared. Overhauls completed "The 2011 base in this target is heavily impacted by [Gulf of Mexico Macondo well] spill costs and the Macondo trust fund payments; stripping this out the cash flow growth target to 2014 actually looks broadly flat," the bank said in a note. Chief Executive Bob Dudley said the group would sell another $10 billion (Dh36.7 billion) worth of oil and gas fields, lifting the value of the asset sell-off plan it unveiled in the wake of the Gulf of Mexico disaster, to $45 billion. The cash will be recycled into higher margin assets and a planned doubling of BP's exploration effort. Dudley added that a wide programme of overhauls to improve safety at BP's facilities had also been completed, ending another dampener on production. "BP's year of consolidation is essentially over," Dudley told a press conference in London. "Third quarter is our low point." Third-quarter production was down 12 per cent on a year ago at 3.32 million barrels of oil equivalent a day. Ahead of forecast This drove a 4 per cent drop in underlying profits for the quarter, which the London-based company also announced yesterday. BP said it made a replacement cost net profit of $5.14 billion, up from $1.85 billion in the same period last year when the group took a large charge related to the oil spill. Stripping out such one-offs, the result was $5.33 billion, ahead of an average forecast of $5.03 billion given in a Reuters poll of nine analysts.