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BP profit doubles in 4Q
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February 15, 2000: 8:17 a.m. ET
Record earnings at Europe's No. 1 oil producer, meeting forecasts; shares slip
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LONDON (CNNfn) - BP Amoco said Tuesday fourth-quarter earnings more than doubled amid booming oil and gas prices, but shares of Europe's largest oil company fell as profit matched but didn't exceed most analysts' expectations.
The London-based giant said replacement-cost income - a standard measure of oil company profitability - jumped 145 percent to $2.123 billion
in the quarter ended Dec. 31 from $866 million a year earlier, excluding one-time items.
While the result was near the top end of the forecast range, BP Amoco's aggressive cost cutting has often seen it beat the market in earlier quarters. This time, analysts had predicted earnings of between $1.91 billion and $2.25 billion, according to Reuters.
"The results were good but not exceptional," said Peter Hitchens, oil company analyst at Williams de Broe in London.
BP Amoco (BPA) shares fell 1.7 percent to 465 pence, after rising almost 4 percent earlier in the session, helped by a surge in the price of crude oil to a nine-year high.
Hitchens, who rates BP Amoco a "sell", said rival Shell's (SHEL) recent profit statement, which last week came in at the top end of analyst expectations, had bettered BP's fourth-quarter performance.
"[Earnings of] $2.1 billion were not enough to support BP's share price," said Hitchens. "Shell looks the better bet."
Shares of Shell Transport & Trading, joint owner of the Shell Group with Netherlands-based Royal Dutch Petroleum, rose 1 percent in London Tuesday and have dropped just 3 percent this year, outperforming the company's U.K. rival.
The company said its cost-cutting program had generated pre-tax savings of $600 million in the final quarter of 1999, taking the full-year figure to $2.5 billion. Capital expenditure fell 29 percent over the year to $7.3 billion, but the company said it would raise this "significantly" to boost growth.
Group chief executive John Browne said in a statement that the company, formed by the 1998 merger of British Petroleum and Amoco, had achieved half of the cost-saving targets laid down last July in a third of the anticipated time.
Fourth-quarter earnings more than tripled to 8.67 cents per share from 2.68 a year earlier. For the full year, replacement cost earnings rose 40 percent to $6.206 billion from $4.428 billion a year earlier, for a 33 percent rise in earnings per share to 27.48 cents.
While oil prices have climbed to their highest levels since the Gulf war in 1991, earnings were weakened by continuing overcapacity in the "downstream", or refining and marketing business, where replacement cost earnings fell 8 percent to $464 million in the fourth quarter. Earnings in the "upstream" exploration and production sector doubled to $2.676 billion, reflecting an average oil price that was $4.68 a barrel higher than a year earlier.
BP stock has fallen 17 percent this year after U.S regulators sought to block its planned $27 billion acquisition of Atlantic Richfield (ARC: Research, Estimates). BP made no reference to its dispute with the Federal Trade Commission in its earnings announcement. 
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