Forecast-beating BP delights dividend hunters

Oil and gas company BP (BP.L) has raised its dividend for the first time since re-instating the payout a year ago in the wake of the worst offshore oil spill in US history in the Gulf of Mexico.

The FTSE giant, which is soon to start a major trial over damages for the 2010 Gulf of Mexico oil spill, revealed its fourth-quarter earnings, adjusting for non-operational items and fair value accounting effects, hit a better-than-expected $4.98 billion in the fourth quarter.

This number slightly beat analyst forecasts and also competitor Royal Dutch Shell (RDSb.L)’s reported earnings of $4.85 billion.

Investors, who have waited patiently for a higher dividend since 2010’s disaster, will receive a payment of eight cents per ordinary share, which BP said it expected to pay in March.

The corresponding amount in sterling will be announced on 19 March 2012, the company added. Saket Vemprala, an oil and gas analyst for Business Monitor International, said the dividend increase was a good result for investors: 'It was probably as good as it gets, there are so many demands on BP's money.'

BP's fourth-quarter replacement cost profit, a key industry benchmark, was $7,606 million, compared with $4,614 million a year ago.

Chief executive Bob Dudley, who replaced Tony Hayward in 2010 in the wake of the Deepwater Horizon rig disaster, said today he expects organic capital spending will grow to some $22 billion in 2012, up from 2011's $19 billion.

The company is due to start a major civic trial on the the Deepwater Horizon accident in New Orleans on 27 February.

However, BP could still reach a settlement with the US government. Dudley commented today: ‘As I have said before, we are prepared to settle if we can do so on fair and reasonable terms, but equally, if this is not possible, we are preparing vigorously for trial.’

Vemprala said: 'They have set aside about $45 billion in total and could get a settlement around that figure.'