Data released Tuesday showed BP beat profit expectations for the fourth quarter of 2014 while taking a $3.6 billion impairment charge and cutting capital expenditures due to low oil prices, says Reuters. The company announced underlying replacement cost profit at $2.2 billion versus expectations of $1.5 billion.
BP said it took a $3.6 billion post-tax net charge mainly relating to impairments of upstream assets in the North Sea and Angola due to lower oil prices and resulting in a fourth quarter replacement cost loss of $969 million.
It also said it would cut capex to $20 billion in 2015 from $22.9 billion in 2014. It maintained its quarterly dividend at 10 cents per ordinary share.
"We have now entered a new and challenging phase of low oil prices through the near and medium term," said Bob Dudley, BP's chief executive. "Our focus must now be on resetting BP."
BP said its stake of just under 20 percent in Russian state oil major Rosneft generated a profit $470 million, down from $1.1 billion in the same quarter a year ago but up from just $110 million in the third quarter. It added the figures were based on provisional numbers and could change.
BP has sold $40 billion of assets since the 2010 Gulf of Mexico spill and announced an additional $10 billion disposal by 2015.
The company said production for full year 2015 is expected to be higher than 2014 despite plans to reduce exploration expenditure and postpone marginal projects.
At the end of 2014 BP’s net debt was $22.6 billion and the debt-to-capitalization ratio 16.7 percent, slightly above the 16.2 percent ratio a year earlier. Chevron and Royal Dutch Shell, have responded to the
drop in oil prices by around 60 percent since June by cutting spending
over the next few years. Shell said it would trim its planned
investments by $15 billion over the next three years but warned against "overreacting" to the declines. Chevron executives slashed the company's 2015 capital budget by 13 percent to $35 billion.
