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The Boston Globe

Business

Asset sales weigh on BP earnings

LONDON — BP PLC’s fourth-quarter profit fell 30 percent as the asset sales that it has pursued to compensate victims of the Gulf of Mexico oil disaster reduced production.

The company said Tuesday that net income slid to $1.04 billion from $1.49 billion in the year-ago quarter. A number of factors were behind the decline, with lower production levels following the asset sales a key factor. Overall production, excluding Russia, fell 1.9 percent to the equivalent of 2.25 billion barrels of oil a day. BP said it expects production to decline this year because of the expiration of a concession in Abu Dhabi.

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A drop in prices for refined products and costs related to new projects also weighed on BP’s profits, despite strong results at Rosneft, the Russian company in which BP holds a 19 percent stake.

Still, chief executive Bob Dudley delivered an upbeat forecast, citing increased production in the North Sea, Angola, and Gulf of Mexico and the completion of major projects for the production of crude oil and natural gas, as well as refined products such as gasoline.

The Deepwater Horizon spill in the gulf continues to eat into earnings, though. Expenses related to the 2010 disaster cut pretax profit by $189 million in the quarter and $469 million for the full the year.

The explosion on the Deepwater Horizon drilling rig killed 11 workers and released millions of gallons of oil into the gulf.

BP has set up a $20 billion trust fund to compensate victims of the spill. As of Dec. 31, charges to the fund amounted to $19.39 billion, leaving $662 million that could be charged to the trust fund with no net impact on earnings.

The spill, which created a huge furor, prompted the company to transform its business. It has sold off a little under $40 billion worth of assets in response, and more assets are expected to be sold over the coming couple of years.

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