London (Platts)--5Feb2013/603 am EST/1103 GMT

BP Tuesday reported a 20% fall in adjusted earnings for the fourth quarter of 2012 as lower oil and gas production offset record downstream performance.

Excluding one-time items and inventory effects, the company reported net income of $3.98 billion for the quarter, down from $4.98 billion the year before, which beat market expectations due to a lower-than-expected tax rate.

For the full year, underlying replacement cost profit was $17.6 billion, compared to $21.7 billion in 2011.

The company's earnings included a $4.13 billion pre-tax charge related to the 2010 Macondo oil spill in the Gulf of Mexico, of which $3.85 billion reflected its agreement with the US government to settle all federal criminal charges for the incident.

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BP, which stopped equity accounting of its stake in Russian venture TNK-BP on October 22, said its oil and gas production for the October-December quarter was 2.29 million b/d of oil equivalent, 7.1% lower than the fourth quarter of 2011 due mainly to asset sales.

BP said its 2012 production -- excluding TNK-BP -- was 2.32 million boe/d, 5.7% lower than 2011.

BP maintained its guidance of a rise in underlying production in 2013 but said reported output will fall on the year due to 150,000 boe/d of asset sales and PSC pricing effects.

Excluding the sale of its interest in TNK-BP, BP has now agreed divestments with a total value of $37.8 billion since 2010, effectively meeting its goal of $38 billion of divestment by the end of 2013 to help pay for the Gulf of Mexico spill.

"We have moved past many milestones in 2012, repositioning BP through divestments and bringing on new projects...Moving through 2013 we will deliver further operational milestones and remain on track for delivery of our ten-point strategic plan, including our target for operating cash flow growth, by 2014," CEO Bob Dudley said in a statement.

BP, which is facing a US trial this month over its final liabilities for the 2010 spill, saw its shares rise at market open in London. By 1002 GMT, BP's shares were trading 1.5% higher at 468.70 pence ($7.39).

Downstream, BP reported a replacement cost profit of $1.32 billion for the October-December quarter, compared with $564 million in the year-ago period, due to higher margins. Crude throughput averaged 2.35 million b/d in the quarter, down from 2.45 million b/d a year ago.

The planned outage at the Whiting, Indiana, refinery as part of a major upgrade project had an impact on the quarter's result, BP said, adding that upgraded plant is still expected to come online in the second half of 2013.

BP said it expects the financial impact of refinery turnarounds in the first quarter of 2013 to be similar to the fourth quarter of 2012, and lower for the full year 2013 than in 2012.

The petrochemicals business delivered an underlying replacement cost profit of $46 million in the fourth quarter compared with $96 million in the same period last year.

The company said it expects to report a reserve replacement ratio, excluding acquisitions and disposals, in the range of 75-85% for 2012, based on US SEC accounting.

BP's organic capital expenditure is expected to be $24 billion-$25 billion in 2013, up from $23 billion in 2012.

Looking ahead, BP said its gross organic capital expenditure is expected to be in the range of $24 billion to $27 billion from 2014 to the end of the decade, together with $2 billion-$3 billion of divestment a year on average.

This year, BP said its expects its average tax rate to between 36-38% compared to 30% in 2012.

--Robert Perkins, robert_perkins@platts.com
--Edited by Maurice Geller, maurice_geller@platts.com

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