Less than two years ago, the British oil company BP was worried about its very survival as a seemingly unstoppable oil spill in the Gulf of Mexico threatened to destroy its finances and reputation.
But on Tuesday, BP expressed renewed confidence in its future, reporting strong quarterly profits and raising its dividend to shareholders. The company also said it was eager to resolve billions of dollars in remaining private and government claims from the accident, whether through a settlement or in a trial scheduled to begin February 27 in New Orleans.
The explosion of the Deepwater Horizon drilling rig in April 2010, which killed 11 workers and spilled millions of barrels of crude oil into the gulf, was the most serious environmental disaster involving the oil and gas industry in the United States since the Exxon Valdez oil tanker struck a reef in Alaskan waters in 1989. BP was forced to revamp its senior management and safety procedures in order to regain its footing with international regulators and the public, and oil analysts say the company?s reputation will be damaged for years to come.
On Tuesday, Robert W Dudley, BP?s chief executive, told reporters in London that BP was ?on the right path? as the company reported $7.7 billion in profit for the fourth quarter of 2011, a 38% increase from a year earlier. BP said production was up substantially from the previous quarter, and it expected its cash flow by 2014 to surge 50% past that of 2011, giving the company the financial strength to invest in exploration and pay even higher dividends.
BP is a much smaller company than it was before the accident, having sold $30 billion, or about 20%, of its assets to pay for costs and claims related to the accident. Its stock price is still well below where it was before the accident.
But its profit for each barrel of oil is comparable to other major oil companies, according to Fadel Gheit, a senior oil analyst at Oppenheimer & Company. ?BP is here to stay,? he said.
Still, BP has not yet been able to put the spill behind it. The company faces possible criminal charges in the accident, billions of dollars in pollution fines and claims from people and businesses that have rejected settlements from the $20 billion claims fund set up by the company.
The government has estimated that 4.9 million barrels of oil have leaked into the gulf, but the final number will be critical in figuring out federal penalties under the Clean Water Act.