A raft of asset sales, particularly that of BP’s (BP.) share in Russian joint venture TNK-BP, constricted earnings and production during 2012. But that divestment programme, though largely forced upon it, has allowed BP to refocus its production model ahead of some new major projects that are due to come on-stream.
BP’s full-year underlying replacement cost profit - which is adjusted for oil price movements and accounting effects - actually fell 19 per cent to $17.6bn (£11.3bn), although that was in-line with analysts' estimates. Given that BP generated underlying profit from TNK-BP of $4.13bn in 2011, its sale to Rosneft was inevitably going to hit group earnings hard. BP was also forced to book $6.28bn in impairment charges linked to asset sales, compared with $2.06bn in 2011.