Losses narrow at oil giant BP as price of crude bounces back

BP chief executive Bob Dudley
Photo: Dominic Lipinski/PA Wire

BP chief executive Bob Dudley Photo: Dominic Lipinski/PA Wire - Credit: PA

Under-fire oil giant BP narrowed losses in the first three months of the year as swingeing cost-cutting helped it offset falling crude prices.

BP posted replacement cost losses of 485million US dollars (£335m) for the first three months of the year, down from losses of 2.2bn US dollars (£1.5bn) in the previous three months.

On an underlying basis, the group also defied expectations for a loss, posting adjusted profits of 532m US dollars (£367m), although this still marked a 79% plunge on the 2.58bn US dollar (£1.8bn) profit reported a year earlier.

The update comes less than two weeks after BP suffered an investor rebellion over its chief executive’s pay deal at its annual general meeting, when almost 60% of shareholders rejected its remuneration report for the last year, which included a salary package of 19.6m dollars (£13.8m) for chief executive Bob Dudley.

Its figures show trading has improved markedly since a dire end to 2015, with oil prices touching near 13-year lows.

The global commodity price rout saw the cost of crude drop to 34 US dollars a barrel on average in the first three months of 2016 compared with 54 US dollars a year ago.

The oil price crash left BP nursing its largest annual loss for at least 20 years, slumping into the red by 5.2bn US dollars (£3.6bn) in 2015, surpassing even the mammoth losses seen in the wake of the Deepwater Horizon explosion and oil spill in the Gulf of Mexico in 2010.

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While BP’s losses have narrowed in the first quarter of 2016, it still compares with replacement cost profits of 2.1bn US dollars (£1.4bn) a year earlier.

However, the cost of crude has bounced back in recent weeks, now trading at around 45 US dollars a barrel, while BP is also beginning to see the benefits of swingeing cost-cutting actions.

Mr Dudley said: “Despite the challenging environment, we are driving towards our near-term goal of rebalancing BP’s cash flows.”