BP agreed last night to pay $303m to settle charges that it had manipulated the propane gas market in the United States.
News of the deal came hours after the oil giant revealed res-ults that lived up to the warning by its chief executive Tony Hayward that they would be "dreadful".
The company posted a near 50 per cent drop in profit from $6.9bn (£3.4bn) in the third quarter of last year to $3.8bn this year. The last time BP's profits touched that level was three years ago, when the average oil price was less than half of what it is now.
BP was charged last year with price-rigging by cornering the propane market during illegal energy trading in 2004. A Dep-artment of Justice lawsuit alleged that one trader told another: "Dude, you're the entire [expletive deleted] propane market."
The settlement with the DoJ and the Commodity Futures Trading Commission is expected to be announced tomorrow. As well as the $303m fine, it was reported last night, the settlement is also believed to include a deferred prosecution agreement on criminal charges in which BP will submit to independent ethics monitoring by a federal government appointee. None of the parties would comment.
The settlement removes another hangover from the leader-ship of Lord Browne of Madingley, who was replaced by Mr Hayward in May.
BP's chief financial officer Byron Grote blamed yesterday's poor results on a litany of problems: falling refining margins, reduced capacity at refineries in Indiana and Texas, leaks that led to shutdowns in Alaska's Prudhoe Bay, and production delays at new fields.
Yet he sought to paint the poor performance as a low point from which the company would now stage its recovery. From next year, he said, "you will see progressive improvement in underlying financial performance". Central to that effort will be the sweeping restructuring announced by Mr Hayward this month, under which thousands of jobs will be cut as the company seeks to eliminate several levels of unnecessary bureaucracy.
Mr Grote said yesterday that the company had no firm idea of how many jobs would go or the scale of the cost savings they would generate, but that they would not affect frontline workers in the field. "This is aimed at a complete house cleaning from the top to the bottom. It's aimed at overheads and unravelling the complexity the company had inadvertently developed over the course of the last several years," he said.
Analysts were unsurprised by the group's performance, and many had expected worse. Instead, the market reacted positively, taking the view that the company would now begin to right itself. Richard Griffith of Evolution Securities said: "Of more importance is how BP performs from now ... History suggests that self-help is easier to deliver than production growth for the super majors. Today we may have finally passed the low water mark for BP."