BP upbeat despite falling profits in fourth quarter

Profits at oil titan BP slipped in the fourth quarter owing to lower upstream production levels, but the company assured that it well-positioned for growth after moving past 'many milestones' last year.Underlying replacement cost (RC) profit, adjusted for non-operating items and fair value accounting effects, totalled $4.0bn in the last three months of 2012, down from $5.0bn a year earlier. Nevertheless, net debt fell from $31.5bn to $27.5bn during the quarter, with the gearing level of 18.7% within the company's target range of 10-20%.Underlying RC profit for 2012 as a whole fell from $21.7bn to $17.6bn.  "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," said Chief Executive Bob Dudley."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."Underlying production of oil and gas in upstream, which excludes output from the exited TNK-BP joint venture, was broadly flat in 2012, in line with the company's guidance. However, fourth-quarter production fell 7.0% year-on-year to 2.29m barrels of oil equivalent per day, as the impact of of divestments, production sharing agreement effects and natural field declines partially offset by new production from major projects.In downstream, BP delivered a record level of earnings in 2012, its fourth consecutive year of underlying profit growth. However, the fourth quarter was met with significantly lower refining margins than the previous quarter.