BP plans to shed 2 refineries, focus on Whiting
BP PLC outlined plans to rebound from the Gulf of Mexico disaster as a smaller, safer company—selling off almost half its U.S. refinery business—and restored its dividend payment to shareholders as it unveiled strong fourth-quarter profits Tuesday.
The company plans to concentrate its U.S. refining and marketing activity in Whiting and Cherry Point, Wash., as well as in its 50 percent stake in a Toledo, Ohio, facility.
But uncertainty over the final bill for the Gulf spill and criticism from some analysts that the company shunned a more drastic restructuring tempered the good news.
Casting a further shadow was a dispute at the London-based company’s Russian subsidiary, TNK-BP, which Chief Executive Bob Dudley acknowledged may cost BP financially to resolve.
Dudley painted 2011 as a year of “recovery and consolidation” for the company as he listed three priorities: improving safety, restoring trust and finding value growth for shareholders.
As anticipated, BP posted a full-year loss in 2010—its first in almost 20 years. High crude oil prices at the end of the year lifted fourth-quarter profit by 30 percent to $5.6 billion. But that was not enough to wipe out the effects of the Gulf spill, resulting in the full-year loss of $3.7 billion, compared to a profit of $16.6 billion in 2009.
“2010 will rightly be remembered for the tragic accident and oil spill in the Gulf of Mexico, and it is clear that as a result, BP is a company in transition,” Dudley said in London.
“I am determined that we will emerge from this episode as a company that is safer, stronger, more sustainable, more trusted and also more valuable.”
Among its first steps of a return to business, the company announced that it would pay a 7 cent per share, or $1.25 billion, dividend to shareholders in the fourth quarter. The company scrapped the first three quarterly payments last year amid political and public pressure to set aside funds to pay for the April 20 Macondo well blowout that killed 11 workers.
“We believe now is the right time to resume payment of a dividend to our shareholders,” said Chairman Carl-Henric Svanberg.
“We have chosen a prudent level that reflects the company’s strong underlying financial and operating performance but also recognizes the need to fully meet our obligations in the Gulf of Mexico and to maintain financial flexibility.”
While stressing its commitment to the Gulf, BP put its Texas City and Carson refinery near Los Angeles and the associated marketing businesses up for sale. Bloomberg reported Tuesday BP plans to raise at least $4.4 billion from the refinery sales. BP said it already had received inquiries for the assets and hopes to conclude sales by the end of 2012. It added it plans to honor all its obligations stemming from a 2005 explosion at Texas City that killed 15 workers.
The Whiting Refinery is undergoing a $3.8 billion project to retrofit the more than 120-year-old plant to accept more heavy crude extracted from Canadian oil sands.
The equipment modernization and installation effort at the refinery, which has the capacity to refine 405,000 barrels of oil per day, is expected to wrap up by the end of 2012. The Whiting Refinery is the nation’s sixth-largest in terms of refining capacity and will be BP’s largest if Texas City is sold.
“These refineries have greater flexibility to refine a range of crude oils including heavy grades, and on average are more diesel-capable than BP’s current portfolio,” a company-issued statement said Tuesday. “They are also well-integrated with BP’s marketing operations and benefit from advantaged and focused logistics infrastructure.”
Shares in the company were trading 0.63 percent higher in the early afternoon at $47.77 on the New York Stock Exchange. That’s still around 21 percent lower than on April 20, the day of the Macondo well explosion, but it is well off a low of $27.02 reached in late June.
Times staff writer Bowdeya Tweh contributed to this report.