Corrections were made to this story on Apr. 26.
BP PLC reported a loss of $583 million for this year’s first quarter compared with a $2.6-billion profit in the same quarter in 2015. The company reported an underlying replacement cost profit of $532 million for this year’s first quarter compared with a profit of $196 million for the previous quarter and a profit of $2.6 billion for first-quarter 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, the firm says.
Underlying operating cash flow in the quarter was $3 billion, excluding $1.1 billion of payments related to the 2010 Deepwater Horizon oil spill offset by divestment proceeds of $1.1 billion.
A charge of $900 million related to the Deepwater Horizon spill was taken during the quarter, bringing the total pretax cumulative charge related to the event to $56.4 billion.
The charge for the quarter included $600 million related to business economic loss claims not previously provided for, as well as costs relating to the settlement of certain civil claims outside of the 2012 settlement with the Plaintiffs’ Steering Committee.
The $1.1-billion pretax cash outflow related to the spill in the quarter included $530 million related to the 2012 criminal settlement.
BP’s downstream segment reported an underlying pretax replacement cost profit of $1.8 billion compared with $1.2 billion for the previous quarter. Lower costs, strong refining operations, and an improved supply and trading contribution more than offset the impact of the weaker refining environment and the seasonal reduction in fuels sales, the firm says.
The upstream segment reported an underlying pretax replacement cost loss of $747 million for the quarter, similar to the previous quarter’s result. The firm explains that lower costs, including the benefits of simplification programs and lower exploration write-offs, largely offset the impact of lower oil and gas prices.
BP’s overall oil and gas production, including Rosneft, was 3.5 million boe/d. Excluding Rosneft, BP’s upstream production was 2.4 million boe/d, up 5.2% from the year-ago level.
The Brent oil marker price averaged $34/bbl in the quarter compared with $44/bbl in fourth-quarter 2015 and $54/bbl in first-quarter 2015, and refining margins were at the lowest quarterly average in more than 5 years. Brent prices have so far averaged $40/bbl 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,” said Bob Dudley, BP group chief executive.
BP’s organic capital expenditure in the first quarter was $3.9 billion compared with $4.4 billion in first-quarter 2015. BP now expects total organic capex in 2016 to be about $17 billion, and in the event of continued low oil prices, maintains flexibility to move to $15-17 billion in 2017.
The firm earlier this year set capex ranges of $17-19 billion for each of 2016 and 2017(OGJ Online, Feb. 2, 2016).
Brian Gilvary, BP 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[/bbl].”