BP sees profits dive amid plunging oil prices

Tuesday 02 February 2016

BP laid bare the impact of plunging oil prices as it slumped into the red by $5.2 billion (£3.6 billion) last year.

The blue chip giant revealed losses of $2.2 billion (£1.5 billion) for the fourth quarter alone after its upstream business - exploration, drilling and well operations - suffered in the face of the tumbling cost of crude.

On an underlying basis, replacement cost profits tumbled by 51% to $5.91 billion (£4.1 billion) in 2015.

BP's annual loss compared with profits of $8.1 billion (£5.6 billion) in 2014 and came as it also took another $12 billion (£8.3 billion) hit for the Gulf of Mexico oil spill in 2010.

In the fourth quarter, BP said underlying replacement cost profits dropped to $196 million (£136 million) from $2.2 billion (£1.5 billion) a year earlier after its upstream business saw losses of $728 million (£506 million).

The group added that hefty restructuring charges of $450 million (£313 million) also pushed the group into the red at the end of the year.

The cost of crude slumped below $28 a barrel at one stage last month and has collapsed by more than 70% since a peak of around $115 a barrel in the summer of 2014.

But despite the losses, BP - a mainstay of UK pension funds - announced that dividend payouts would remain unchanged at ten cents a share for the fourth quarter.

Bob Dudley, BP group chief executive, said: "We are continuing to move rapidly to adapt and rebalance BP for the changing environment.

"We're making good progress in managing and lowering our costs and capital spending, while maintaining safe and reliable operations."

The group added that oil prices are expected to remain "challenging".