LONDON – BP has reported results for 3Q 2015 and set out a medium-term financial frame to balance cash flows by 2017 at around $60/bbl.
BP reported underlying replacement cost profit of $1.8 billion for the quarter, compared with $1.3 billion for 2Q 2015 and $3 billion for 3Q 2014. Compared with a year earlier, the company said that the 40% drop primarily showed the impact of sharply lower oil and gas prices. Cost cutting and a strongly perform downstream segment allows revenues to climb from earlier this year.
BP’s upstream segment took a significant hit over the past year. Pre-tax underlying replacement cost profit was $0.8 billion, compared with $0.5 billion in 2Q 2015, and $3.9 billion in 3Q 2014. The major said that the lower result compared with a year ago was primarily due to the effect of lower oil and gas prices, partly offset by lower costs and strong gas trading results.
Bob Dudley, BP group CEO, said: “Last year, we acted decisively to reset BP for a sustained period of lower oil prices and the results are coming through well. We are now in action to rebalance our financial framework in this new price environment.
“And I am confident that BP’s strong and well-balanced portfolio of businesses and projects gives us the ability to grow value into the future. All of this underpins our strong priority of sustaining our dividend and then growing free cash flow and shareholder distributions over the long term.”
BP began to simplify its organization and increase efficiency throughout the group in 2013. Controllable cash costs for the group over the first nine months of 2015 were $3 billion lower than in the same period of 2014. BP expects this work to extend further and by 2017 annual cash costs are expected to be over $6 billion lower than those seen in 2014.
The company’s current divestment program is nearing completion with total agreed divestments expected to approach $10 billion by the end of 2015. The total is currently $7.8 billion. BP said it expects a further $3-5 billion in divestments in 2016 before returning to a rate of around $2-3 billion a year thereafter.
In July, agreements in principle were reached to settle all outstanding federal and state claims arising from the Deepwater Horizon oil spill. These provide for principal payments of up to $18.7 billion over a period of 18 years.