By Sarah Young
LONDON (Reuters) - BP
BP's results, hit by tough conditions in U.S. refining and partly offset by strong contributions from its stake in Russia's Rosneft
The world's fourth-biggest publicly traded oil company on Tuesday reported underlying replacement cost profit of $2.8 billion for the fourth quarter of 2013, 28 percent lower than the same period a year ago, but ahead of a consensus forecast of $2.7 billion.
Exxon Mobil Corp
Investec analysts said BP's beat on the consensus for underlying replacement cost profit was partially a result of a lower tax charge during the quarter compared to last year.
Bernstein analyst Oswald Clint said on an operational basis, the company missed a consensus target by around 10 percent and its performance would have looked bleaker without the strong performance from its stake in Rosneft.
BP is also dealing with the fallout from the Gulf of Mexico oil spill which killed 11 men and became the United States' worst offshore environmental disaster.
The company said the provision to cover the spill's clean-up, fines, compensation and legal costs had now risen to $42.7 billion from $42.5 billion last year.
Having settled criminal proceedings, BP is two phases into a three-stage civil trial, and has an army of lawyers working to push remaining spill fines and penalties into the future.
The group has been shedding assets since the 2010 spill, and sold businesses worth $22 billion in 2013 alone.
BP said the fall in its earnings was partly due to its shrinking asset base, but also hurt by difficult conditions in its refining business, which is comparatively much smaller after it sold two major refineries in the U.S. last year.
In its refining or downstream business, BP posted underlying pretax replacement cost profit of $70 million in the fourth quarter, compared with $1.4 billion in the same period in 2012.
Costs associated with the start-up of the Whiting refinery, also in the U.S., and exploration write-offs were partially offset by higher earnings from Rosneft.
Rosneft, the state-controlled Russian company into which BP folded its Russian business last year in exchange for a 19.75 percent stake, delivered $1.1 billion of BP's profits.
Shares in BP, which have fallen 2 percent in the year to date, were down 1.6 percent at 466.00 pence by 0957 GMT, lagging Britain's bluechip index <.FTSE> which was 0.2 percent lower.
BP reconfirmed a capital expenditure target of between $24 billion to $25 billion for this year and guided that cash flow would be in line with an earlier announced plan.
"They're reiterating most of their targets, cash flow and capital expenditure, that's a positive," Bernstein's Clint said.
Oil company shareholders, worried about the impact of rising industry costs crimping cash flow and the returns they will receive if oil prices drop, want oil companies to control spending and return spare cash.
BP stole a march on rival Shell last October, by hiking its dividend, scaling back capital spending and promising to return the proceeds of asset sales to investors.
In October, the company raised its quarterly dividend and said it would sell $10 billion of assets over the next two years and return most of the proceeds to shareholders.
Shell said last Thursday it would cut capital spending and raise its quarterly dividend by 4 percent.
BP plans to update investors on its plans for the future on March 4.
(Reporting by Sarah Young; editing by Kate Holton and Jane Merriman)