BP profit hit by oil prices

Oil and gas giant BP reported underlying replacement cost profit of $2.6 billion for the first quarter, down 20 when compared with the same period in 2014.

“We are resetting and rebalancing BP to meet the challenges of a possible period of sustained lower prices. Our results today reflect both this weaker environment and the actions we are taking in response,” said Bob Dudley, BP group chief executive. “We are continuing to progress our planned divestment programme, we are resetting our level of capital spending, and we are addressing costs through focusing on simplification and efficiency throughout BP.”

Oil and gas prices in the quarter were sharply lower than a year earlier. Brent crude averaged $54 per barrel compared with $108 in 1Q 2014. This was the lowest quarterly average Brent price since 1Q 2009.

The Henry Hub gas marker price averaged $2.99 per million British Thermal Units, 40% lower than a year earlier, BP said in the first quarter report.

BP’s operating cash flow for the quarter was $1.9 billion compared with $8.2 billion a year earlier.

At the end of the quarter BP’s net debt was $25.1 billion, equivalent to a gearing level of 18.4%.

BP’s Upstream segment reported underlying pre-tax replacement cost profit of $0.6 billion for the first quarter of 2015 compared with $4.4 billion for 1Q 2014. The result included a $545 million loss for BP’s US Upstream business.

As expected, the Upstream result was significantly affected by lower oil and gas prices as well as weaker gas marketing and trading and $375 million costs associated with the cancellation of contracts for two deepwater rigs in the Gulf of Mexico no longer required for BP’s reset drilling programme, the company said.

Overall Group oil and gas production, including Russia, was 3.3 million barrels of oil equivalent a day (mmboe/d). Excluding Russia, reported Upstream production of 2.3 mmboe/d was 8.3% higher than a year earlier and underlying production 3.7% higher.

Image: BP