BP Profit Falls on Lower Oil Price, Russia Loss

BP said replacement cost net profit fell 24 percent in the fourth quarter to $2.587 billion, undershooting forecasts amid a collapse in oil prices and as its Russian unit reported a big loss.

BP's full year replacement cost profit, which strips out unrealized gains or losses related to changes in the value of inventories, was $25.6 billion, up 39 percent compared to 2007.

Pat Sullivan / AP

Oil prices plunged in the fourth quarter but the ramp-up to a peak above $147/barrel in July ensured record annual results for Europe's second-largest listed oil company by market value.

The results include a loss of $700 million from the company's Russian venture TNK-BP, related to the effect of lagged tax charges, lower oil prices and asset impairment charges.

Oil and gas production rose 1 percent in the quarter compared to the same period in 2007, to 3.945 million barrels of oil equivalent per day.

Full year output was 3.84 million boepd, compared to 3.82 million in 2007.

BP chief executive Tony Hayward said in a statement that he expected output to grow in 2009 and for BP to have replaced all the oil it pumped in 2008 with new finds, though exact reserve replacement figures were not published.

BP expects to hold investments in drilling and project development steady in 2009, Hayward said, following the trend among the very largest oil companies, which contrasts with big spending cuts across the rest of the sector.

Excluding non-operating items that amounted to a net charge of $18 million, net profit was $2.605 billion compared to an average forecast of $2.98 billion in a Reuters poll of 6 analysts.

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