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BP says profit slides 26 percent in first quarter
British energy giant BP on Tuesday announced sliding net profit for the first quarter of the year compared with the same period in 2014, amid plunging oil prices
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ritish energy giant BP on Tuesday announced sliding net profit for the first quarter of the year compared with the same period in 2014, amid plunging oil prices.
Profit after tax stood at US$2.6 billion (2.4 billion euros) between January and March compared with net profit of $3.5 billion in the first quarter of 2014, BP said in an earnings statement.
"We are resetting and rebalancing BP to meet the challenges of a possible period of sustained lower (oil) prices," said BP chief executive Bob Dudley.
"Our results today reflect both this weaker environment and the actions we are taking in response," such as the selling of assets and heavy cost-cutting.
BP and its peers are slashing investment this year after tumbling oil prices bit into their profits.
World oil prices lost as much as 60 percent of their value between June last year and March, largely owing to a surge in global reserves boosted by robust US production from shale rock.
BP said the average price of a barrel of Brent North Sea crude oil cost $54 in the first quarter compared with $108 one year earlier.
BP said underlying replacement cost profit -- a measure of earnings watched by the market -- slumped 39 percent to $2.1 billion.
But with the profit figure beating analysts' expectations, BP's share price was among the early risers in London, up 1.52 percent at 484.15 pence.
"To put this morning's number into perspective profits are still much lower from a year ago, down by 39 percent but as with anything it's all about expectations and these were low, with most in the market focussed on BP's potential as an acquisition target," said Michael Hewson, chief market analyst at CMC Markets UK.
Analysts say BP could become a takeover target also because it has been forced to sell off assets following the Gulf of Mexico oil spill disaster in 2010.
The British government has warned BP that it would oppose a foreign takeover of the company, according to media reports on Monday.
"For the past five years the company has been on a ruthless efficiency drive as a result of the 2010 Gulf of Mexico oil spill, disposing of assets, cutting jobs and driving efficiencies, while as recently as January the company announced a raft of further job losses and wage freezes, as it continued to drill down on costs," said Hewson.
BP said it had booked another $332 million charge linked to the 2010 Gulf of Mexico oil spill disaster, bringing its total cost to a staggering $43.8 billion.
World oil prices have meanwhile slumped, exacerbated by the OPEC oil cartel's decision in November to maintain output levels. The 12-nation group, which pumps about 30 percent of the world's oil, is bidding to maintain market share in the face of a surge in US output.
Energy titan Royal Dutch Shell earlier this month announced a mega-takeover of British rival BG Group worth £47 billion ($71.1 billion), consolidating their positions in a sector battered by sliding oil prices.(+++)
