LONDON: BP reported a 91 per cent decline in fourth-quarter earnings after average crude oil prices dropped to the lowest in more than a decade. The company’s shares fell the most since August.
Profit adjusted for one-time items and inventory changes totaled $196 million, the London-based company said on Tuesday. That missed the $814.7 million average estimate of 10 analysts surveyed by Bloomberg. The net loss for the year was $6.5 billion, the most in at least 30 years.
While Chief Executive Officer Bob Dudley has trimmed billions of dollars of spending, cut thousands of jobs and deferred projects in response to the plunge in crude prices, BP’s cash flow still doesn’t cover spending and dividends. The CEO said in an interview that he’s re-tooling BP to balance cash flows at below $60 a barrel. The slump has driven BP’s market value below $100 billion for the first time since the Gulf of Mexico oil spill in 2010.
“It’s very disappointing,” Ahmed Ben Salem, oil and gas analyst at Oddo & Cie in Paris, said by phone. “We were expecting lower profit from upstream, but not a loss. The dividend payout is probably safe for this year, but if oil stays around $30 then they would have to cut capex further.”
Profit has been lower year-on-year for six consecutive quarters as oil prices tumbled. The average price of benchmark Brent crude slumped 42 per cent in the fourth quarter from a year earlier to $44.69 a barrel, the lowest since 2004.
BP’s shares slumped as much as 7.8 per cent and traded at 338.65 pence as of 9:37am in London, giving it a market value of $90 billion. The stock has declined 3.6 per cent this year following last year’s 14 per cent retreat. It is still the third- best performer on the eight-member FTSE 350 Oil & Gas Producers Index.
PetroChina said last week it expects 2015 profit to fall at least 60 per cent. Chevron on Friday reported its first quarterly loss since 2002, while Royal Dutch Shell said last month that fourth-quarter profit is likely to drop at least 42 per cent. The European oil major is scheduled to report full earnings on Thursday.
BP started cutting costs and selling assets following the 2010 oil spill. In October, it lowered its 2015 capital-spending forecast to about $19 billion after investing about $23 billion in 2014. The company said then it expects to spend $17 billion to $19 billion a year through 2017.
