Today BP (LON:BP) reported its second quarter results announcing that underlying replacement cost profits dropped 49% to $720m (550m) from $1.3bn profit recorded in 2015.
The heavy fall comes as oil and gas remain lower causing a raft of lower refining margins, one of their key benchmark measures.
BP said it expects its cash costs for 2017 to be $7bn lower than what was seen in 2014 as the past four months have so far been around $5.6bn lower compared to the 2014 figure as cost cutting exercises come to fruition.
Organic capital expenditure for the first half of 2016 was $7.9bn, full year capital expenditure now expected to be below $17bn.
The disappointing results dragged BP to July lows, shares were down l 1.4% to 434p at 8:30am BST in London’s early morning trade.
The report showed that BP’s oil price averaged $46 per barrel an increase from $34 in the first quarter but still falling short of its 2015 level of $62.
A major element of the report was that the group also announced it will continue its dividend scheme of 40 cents offering a 6.9% dividend yield to be paid in September, dispelling fears that they would be forced to cut dividend payment to strengthen the balance sheet.
In regards to the tragic Deepwater Horizon drilling rig accident that killed 11 employees in 2010 causing one of the worst environmental disasters in recent times, has since seen costs of up to $61.6bn (£46.9m) with the report stating it has “drawn a line under the material liabilities”
BP’s group Chief executive, Bob Dudley said:
“Compared with a year earlier, the underlying second quarter result was impacted by lower oil and gas prices and significantly lower refining margins, but this was partly offset by the benefit of lower cash costs throughout the group as well as lower exploration write-offs.
We are delivering significant improvements to the business that will stick at any oil price. We are now well down the path of transforming our business to compete, whatever the future holds. We now see a much stronger outlook for BP and are focused on growth, both for this decade and beyond”
At 10:12am BST BP plc traded at 431.05 -9.30 (-2.11%)
26/07/16
