BP’s Q2 profit down 45 pct

UK-based energy giant BP reported a 45 percent drop in its second-quarter profit due to lower oil and gas prices and refining margins.

Profit for the second quarter was $720 million on an underlying replacement cost basis, compared with $1.3 billion for the second quarter of 2015, BP said in a statement on Tuesday.

The Brent oil marker price averaged $46 a barrel in the second quarter, up from $34 in the first quarter but still significantly lower than $62 a year earlier, BP said.

BP’s refining margins were the weakest for a second quarter since 2010 at $13.8 a barrel.

BP also said it will continue slashing its capital and cost base.

The company’s cash costs over the past four quarters were around $5.6 billion lower than in 2014. The energy giant expects these costs for 2017 to be $7 billion lower than in 2014.

Organic capital expenditure for the first half of 2016 was $7.9 billion with full year 2016 capital expenditure now expected to be below $17 billion.

“As we look forward we expect the external environment to remain challenging, but we have a strong pipeline of new projects which will add 500,000 barrels of oil equivalent a day of new production capacity by the end of next year,” said BP Chief Executive Bob Dudley.