BP (AFX)

BP Q4 profit falls; sets higher output, capex goals UPDATE(Adds comments on gas prices, outlook)LONDON (AFX) - BP PLC reported weak earnings in the fourth quarter, reflecting a fall in output, US gas prices and refining margins, but revealed increased output goals over the next five years and capital spending for 2007.Clean earnings in the three months to December fell to 4.047 bln usd from 4.985 bln previously, well in line with the forecast range of 3.605-4.105 bln usd and above the consensus figure of 3.868 bln.This was after adding back non-operating charges of 152 mln usd in the fourth quarter, as against the charges of 553 mln usd it booked a a year ago.Replacement cost profit fell to 3.895 bln usd from 4.432 bln after deducting the charges. BP also revealed it is aiming for 3.8-3.9 mln barrels of oil equivalent per day in 2007, 4.0 mln boepd in 2009, and 4.3 mln boepd by 2012, which assumed a 60-usd a barrel price scenario.Volumes for 2006 had been disappointing, as disruptions at its major oil and gas fields reduced output to 3.926 mln boepd from 4.014 mln previously, slightly below its reduced guidance of 3.95 mln boepd.In the fourth quarter, output fell to 3.84 mln boepd from 4.022 mln last time, cutting the profits at the group's key exploration and production unit to 5.063 bln usd from 6.566 bln.BP is upgrading capital spending to 18 bln usd in 2007 from 16.9 bln in 2006 in order to support its growth ambitions.At end-2006, its proved reserves replacement ratio, calculated based on the US Securities and Exchange Commission rules, reached 113 pct."Our strategy is unchanged. We continue to execute it with discipline and focus," said chief executive Lord Browne, who will be retiring in July and will be replaced by Tony Hayward, the head of the E&P business. At the refining and marketing division, BP made a profit of 312 mln usd as against a loss of 165 mln, following the progressive recommissioning of the Texas City refinery after storm-related shutdowns.The Texas refinery reported a loss of 1.1 bln usd in the full-year, BP said.Refining margins have been weak, falling to 6.30 usd a barrel in the fourth quarter and around 6 usd so far in the first quarter of 2007, said the group, adding the near-term outlook will depend on the weather and a relatively heavy US refinery turnaround programme.The outlook for the retail margins, meanwhile, remains uncertain following the deterioration in the fourth quarter relative to the third, it said.Turning to commodity prices, Browne said crude oil prices averaged 59.60 usd a barrel in the fourth quarter, 10 usd a barrel below the third quarter, but still slightly above the same period last year.Demand should remain strong, helped by sustained growth in the world economy, particularly Europe and Asia, he added."The near-term global outlook is for continued growth at close to current rates," Browne said.US gas prices may find temporary support for the rest of the winter, following the declines over the past months, but high inventories are likely to continue to weigh on prices, he added. In the UK, gas prices were also on the decline, amid high inventories and the completion of new infrastructure projects. However, the risk of "temporary price spikes due to late-winter cold spells persists", said Browne.Despite the fall in earnings, BP raised quarterly dividends to 10.325 cents a share from 9.375 cents previously, or 5.258 pence a share, up from 5.288 pence last time.