BP makes $1bn loss as oil prices slump

BP logo closeup

BP has crashed to a $1bn loss in the final quarter of the year as low oil prices and more writedowns hammered its results.

Its chief executive, Bob Dudley, warned the industry had now entered a “challenging new phase” of reduced crude prices clearly signalling he expected no quick bounce back for the value of Brent.

The $969m (£645m) replacement cost loss in the final three months of the year compared with a profit of $1.5bn for the same period last year. The underlying replacement cost loss – a “clean” figure preferred by analysts – came in at $2.2bn, compared to $2.8bn last time.

Shares in BP fell over 2% in early trading despite the company raising the dividend for investors to 10c.

The troubled oil company, which has in the past been a subject of takeover speculation, said it would be slashing its spending for 2015 to $20bn, down from a target of over $24bn in 2014.

BP also revealed it had so far spent $43.5bn on fines and other liabilities resulting from the Gulf of Mexico blowout. The company admits it could still face charges of $13.7bn under a Clean Water Act but is hopeful it can avoid this.

“We have now entered a new and challenging phase of low oil prices through the near and medium term,” said Bob Dudley, BP group chief executive.

“Our focus must now be on resetting BP: managing and rebalancing our capital programme and cost base for the new reality of lower prices while always maintaining safe, reliable and efficient operations.”

BP said it was taking action to respond to the likelihood of oil prices remaining low into the medium term and to rebalance its sources and uses of cash accordingly.

Since 2013, BP has agreed divestments with a cumulative value of $4.7bn and continues to expect this divestment total to reach $10bn by the end of 2015.

Underlying net income from its 20% stake in Russian oil group, Rosneft,, was $470m over the final three months compared with $1.1bn in the fourth quarter of 2013. Gross debt at BP gas now reached $53bn.

BP admitted that it was difficult to judge the final financial impact of the Deepwater Horizon accident. “The total amounts that will ultimately be paid by BP in relation to all the obligations relating to the incident are subject to significant uncertainty and the ultimate exposure and cost to BP will be dependent on many factors.

“These could have a material impact on our consolidated financial position, results and cash flows.”

BP made no comment on the impact of its new spending cuts on jobs. The company, which has already cut hundreds of jobs in Aberdeen and thousands around the world, has frozen pay for all 84,000 staff

Last week, the British-based oil company raised more cash to pay for its Gulf liabilities by handing over a larger stake and operatorship of the Gila and Tiber fields in US waters to Chevron and ConocoPhillips.

Powered by Guardian.co.ukThis article was written by Terry Macalister, for The Guardian on Tuesday 3rd February 2015 09.06 Europe/London

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