BP hoping for turnaround after second year in the red

Oil giant BP has remained in the red for a second year in a row, but said it hoped 2017 would be its turnaround year amid a bounce back in crude prices.

The group posted replacement cost losses of 999 million US dollars for 2016 as it said oil prices remained "challenging", with the average for Brent crude standing at 44 US dollars a barrel - the lowest for 12 years.

A year-end bounce back in oil prices, which have recovered above 50 US dollars a barrel, helped it claw its way out of the red in the fourth quarter, with profits of 72 million US dollars against losses of 2.2 billion US dollars a year earlier.

On an underlying basis, fourth-quarter replacement cost profits more than doubled to 400 million US dollars from 196 million US dollars a year earlier.

But shares in BP - a mainstay of pension funds - fell 2% as this fell short of City forecasts for around 560 million US dollars in the fourth quarter.

Bob Dudley, BP group chief executive, said the group was set for growth this year as it comes out of a recent "trough" caused by the oil price slump and as it moves on from the mammoth cost of the Deepwater Horizon oil spill of 2010.

He said: "With our Deepwater Horizon financial liabilities now substantially behind us, BP is fully focused on the future."

"We start this year with considerable momentum - and a sense of disciplined ambition. We have laid the foundations for BP to be back to growth," he added.

BP revealed the total bill for the Gulf of Mexico tragedy had surged to 62.6 billion US dollars, with another 625 million US dollar pre-tax charge taken in the fourth quarter.

The group said compensation and settlements payments this year are set to be lower at around 4.5 billion US dollars to 5.5 billion US dollars, before falling sharply to around 2 billion US dollars in 2018 and to a little over 1 billion US dollars a year from 2019.

The group's full-year results show a marked improvement on the 5.2 billion US dollars loss posted in 2015, which was its worst result for at least 20 years.

On an underlying basis, BP saw profits more than halve in to 2.59 billion US dollars last year from 5.91 billion US dollars in 2015.

The group said it believes oil prices - currently standing at just over 55 US dollars a barrel - will hold at around 50 to 55 US dollars a barrel this year, although it said its break-even price stands at around 60 US dollars a barrel by the end of 2017.

Its figures come after rival Royal Dutch Shell also reported back on a lacklustre fourth quarter last week, which dragged its annual profits down by 8%.

BP has been slashing costs in the face of weak oil global oil prices and sliding refining margins.

But the group has been making a series of recent acquisitions, including snapping up Australian gas stations at the end of last year and striking a deal to take a 10% stake in Abu Dhabi Company, giving it access to the emirate's largest oilfields.

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