Bob Dudley, BP Group Chief Executive, said: “We have moved past many milestones in 2012, repositioning BP through divestments and bringing on new projects. This lays a solid foundation for growth into the long term. Moving through 2013 we will deliver further operational milestones and remain on track for delivery of our ten-point strategic plan, including our target for operating cash flow growth, by 2014.”

Operating cash flow in the fourth quarter of 2012 was $6.3 billion, and $20.4 billion for the full year compared to $22.2 billion in 2011. At the end of 2012, BP’s net debt was $27.5 billion — down from $31.5 billion at the end of the third quarter — representing a gearing level of 18.7%, within BP’s 10-20% target gearing range.

BP announced a quarterly dividend of 9c a share, to be paid in March.

In BP’s upstream, underlying production of oil and gas, excluding TNK-BP, in 2012 was broadly flat with 2011, in line with guidance. Fourth quarter production, excluding TNK-BP, was 2.29 million barrels of oil equivalent a day (mmboed), 7% lower than in 4Q 2011, with the impact of divestments, production sharing agreement effects and natural field declines partially offset by new production from major projects.

BP’s downstream delivered a record level of earnings for the year, and a fourth consecutive year of underlying profit growth. In the fourth quarter, despite the continued benefit of strong operations, the segment faced significantly lower refining margins than in the previous quarter. The planned outage at the Whiting refinery as part of the refinery’s upgrade project also had an impact on the quarter’s result.

Strategic progress

The sale of BP’s interest in TNK-BP to Rosneft and related transactions expected to result in BP building a 19.75% stake in Rosneft were agreed in the quarter and are expected to complete, subject to regulatory approval, in the first half of 2013. Because BP’s stake in TNK-BP became an asset held for sale following the initial agreement on October 22, the fourth quarter included only 21 days of underlying net income from TNK-BP.

During the quarter BP agreed the sale of non-core upstream assets in the North Sea and China, and of the Texas City refinery and related assets. Excluding the sale of its interest in TNK-BP, BP has now agreed divestments with a total value of $37.8 billion since 2010, effectively completing its major programme of portfolio simplification a year earlier than planned.

“We will continue to see the impact of this reshaping work in our reported results in 2013,” said Dudley. “By 2014, I expect the underlying financial momentum to be strongly evident.”