BP missed quarterly profit forecasts as annual earnings fell for a second year after average yearly oil prices hit their lowest in 12 years but said it expected producers' output cuts to keep prices above $50 a barrel this year.
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BP's annual profits slumped to their lowest level in at least a decade to $2.59 billion, while fourth-quarter profit missed analysts' forecasts hit by $328 million in one-off charges.
BP is the latest oil major to miss forecasts following worse-than-expected results from Shell, Exxon Mobil and Statoil.
BP's $400 million fourth-quarter underlying replacement cost profit, the company's definition of net income, missed analysts' estimates of $560 million but was up from $196 million a year earlier.
The oil major said it expected to be able to balance its books with an oil price of around $60 per barrel by the end of the year, compared with earlier guidance of $50-55 a barrel.
Production is expected to rise this year, BP said, as it is set to start up eight projects, including in Oman and Azerbaijan, the largest number in the company's history in a single year. The company hopes to add 800,000 barrels per day of new production by the end of the decade.
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Chief Financial Officer Brian Gilvary told Reuters that a decision by oil-producing nations to cut output in order to prop up prices would have only limited impact on BP's production through its recently renewed Abu Dhabi concession.
"If everything holds in terms of what OPEC has said I think we will hold north of $50 a barrel," Gilvary told Reuters.
BP reported an annual loss of $542 million in its oil and gas production division, known as upstream, while profits for the refining and trading division were down 25 percent at $5.6 billion.
It expects full-year capital expenditure to be at the higher end of its previous guidance at $16-17 billion.
BP has been on a spending spree in recent months, concluding a string of deals, including in Eni's giant Zohr offshore gas field in Egypt, contracts in Abu Dhabi and Azerbaijan and a stake in exploration areas off the coast of Mauritania and Senegal from Kosmos .
The burst in activity marks a return to growth for the company whose deadly 2010 Deepwater Horizon rig explosion in the Gulf of Mexico forced it to sell assets worth billions of dollars.
BP's bill to compensate for damages caused by the explosion and ensuing oil spill have risen to $61.6 billion.
(Editing by Jason Neely)
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