3rd February 2015
BP posted a 20% drop in underlying profits in the last three months of 2014 compared to a year earlier at $2.2bn (£1.5bn).
Full-year profits were down 10% at $12.1bn, according to the BBC. BP’s share price has fallen 16% since last summer as a result of a 50% drop in oil prices over the past six months. The company said it would cut capital expenditure by up to $6bn this year.
Another UK energy company, BG Group, announced a write-down of nearly $6bn due to the lower oil price.
BP wrote down $3.6bn of assets. After this and other one-off costs, BP reported a loss for the quarter of $969m.
The company owns a 20% stake in Rosneft, a Russian energy supplier, which has suffered because of sanctions against the country and currency weakness.
BP faced further costs of $477m in the quarter from the Gulf of Mexico oil spill in 2010. The total bill for the accident has reached $43.5bn
Bob Dudley, BP chief executive, says: “We have now entered a new and challenging phase of low oil prices through the near and medium term.”
Analysts said BP showed resilience amid difficult market conditions. Its share price rose 3.5% in early trading. The Share Centre also rated the stock a buy.
Graham Spooner, investment research analyst at The Share Centre, said: “In early morning trading, BP shares were up 4% as the oil giant announced its Q4 results. Despite the company continuing the sector trend for write downs and reporting capital expenditure cuts of $4.41bn in 2015, the results were not as bad as investors feared. We also saw the dividend being maintained from the previous quarter.
“Investors in the sector should take note of the CEO’s prediction that lower oil prices will continue through to the medium term – possibly longer than currently anticipated.
“Whilst the drop in oil price may continue to have a dampening effect on earnings, we recommend the stock as a ‘buy’ for investors willing to take on an intermediate level of risk. Investors may wish to drip feed into the stock, as BP focuses on adapting to the lower oil price environment, whilst still prioritising the dividend.”