BP Announce First quarter 2016 results
BP today reported its results for the first quarter of 2016. Underlying replacement cost profit¹ for the quarter was $532 million, compared with $196 million for the previous quarter and $2.6 billion for the first quarter of 2015. Compared with the previous quarter, lower costs throughout the Group more than offset the impact of significantly weaker oil and gas prices and refining margins.
Bob Dudley, BP group chief executive, said:
“Despite the challenging environment, we are driving towards our near-term goal of rebalancing BP’s cash flows. Operational performance is strong and our work to reset costs has considerable momentum and is delivering results. Furthermore, development of our next wave of material upstream projects is well on track.”
The Brent oil marker price averaged $34 a barrel in the quarter, compared with $44 in 4Q 2015 and $54 in 1Q 2015, and refining margins were at the lowest quarterly average for over five years. Brent prices have so far averaged $40 in the second quarter.
“Market fundamentals continue to suggest that the combination of robust demand and weak supply growth will move global oil markets closer into balance by the end of the year,” added Dudley.
BP announced an unchanged dividend for the quarter of 10c per ordinary share, expected to be paid in June.
Underlying operating cash flow² in the first quarter was $3.0 billion. This excluded $1.1 billion of payments related to the Gulf of Mexico oil spill which were offset by divestment proceeds of $1.1 billion.
Operational performance continued to be strong with reliability of Upstream operated assets and refining availability both at 95%.
Organic capital expenditure in the first quarter was $3.9 billion compared to $4.4 billion in the first quarter of 2015. BP now expects total organic capital expenditure in 2016 to be around $17 billion and, in the event of continued low oil prices, sees flexibility to move to $15-17 billion in 2017.
Costs are also reducing; BP’s cash costs³ over the last four quarters were $4.6 billion lower than in 2014. BP expects cash costs for 2017 to be $7 billion lower than for 2014.
Brian Gilvary, chief financial officer, said: “As we steadily take out more costs, the point at which we expect to be able to rebalance 2017 organic sources and uses of cash continues to move lower; we currently anticipate being able to achieve this at oil prices in the range $50-55 a barrel. This progress underpins our commitment to sustaining BP’s dividend as the first priority within our financial frame. Should prices remain low, we have the flexibility to adjust further within the financial framework.”
At the end of the quarter BP’s gearing level was 23.6%. Following the finalisation of the settlement of federal and state claims arising from the Deepwater Horizon accident, and to allow more flexibility in the current volatile oil price environment, BP intends to return to managing gearing within its historical range of 20-30%.
More: Segment results
Oil and Gas News Undiluted !!! “The squeaky wheel gets the oil”
Follow us on Twitter: @OilAndGasPress