BP’s Upstream segment reported an underlying pre-tax replacement cost loss1 of $747 million for the quarter, broadly similar to the previous quarter’s result.
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Earlier this month, BP shareholders rejected a pay deal worth $19.6 million for Dudley, in a symbolic vote in the face of heavy losses and job cuts at the oil giant.
The North Sea crude benchmark Brent surpassed $47 per barrel, its highest price since November past year, while US WTI reached $45.18 per barrel. “More evidence has surfaced about structural oil supply destruction, especially in the US, while global demand continues to set new highs, led by China and USA gasoline consumption”, said Gordon Kwan, the head of regional oil and gas research at Nomura.
Oil hit its highest level of 2016 on Wednesday, driven by a falling dollar and evidence of declining US supply, putting the price on course for its strongest monthly performance since last April. BP expects cash costs for 2017 to be $7 billion lower than for 2014.
He said development of the next wave of material oil and gas production projects that will underpin future profits is well on track.
The London-based oil group is likely ahead of the curve in terms of cost reduction, a result of cuts that were made in 2010 as it scrambled to raise cash to meet settlements relating to the Deep Water Horizon well explosion and oil leak of the same year.
Despite the latest loss, shares rose 5% as the group posted a better than expected underlying profit – stripping out one-off costs and accounting items – of $532m (£365m) – as well as signalling lower spending. “Operational performance is strong and our work to reset costs has considerable momentum and is delivering results”, he added.
BP maintained its dividend at 10 cents per ordinary share. Though oil prices have recovered somewhat since then, they are still relatively low, certainly when compared to the past few years. The company stated that strengthened refining operations, enhanced supply and lower costs largely overcame the adverse effects of weaker refining environment and low crude demand.
BP got an average $26.97/bbl for its oil in the quarter, down from $46.79/bbl last time.
The dollar was down on the day, having fallen about 5 per cent against a basket of currencies since the start of the year, even as USA interest rates are expected to rise.
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The most recent spill-related costs included $600 million related to business and economic loss claims the company hadn’t previously provided for, as well as settlement costs for certain civil claims outside of a 2012 agreement on economic, property or medical damage claims.
