BP, the primary of the key oil corporations to report earnings this week, stated it misplaced $US583 million within the first quarter of 2016, in contrast with a $US2.6 billion revenue in the identical interval final yr.
Decrease oil costs have been behind the loss for BP, whose outcomes have been nonetheless higher than analysts had anticipated. That, and the truth that the corporate stated it will hold its dividend at 10 cents a share, helped buoy BP’s share worth.
Within the present surroundings, analysts say an oil firm’s inventory worth is essentially decided by the dividend. Sustaining it’s “the primary precedence inside our monetary body”, BP’s chief monetary officer, Brian Gilvary, stated in a information launch on Tuesday.
BP stated it had misplaced $US1.2 billion in its key oil and fuel exploration and manufacturing unit, which was an enormous cash earner when costs have been excessive. Oil costs for the quarter averaged $US34 a barrel for Brent crude, greater than a 3rd decrease than a yr earlier.
“Your complete business goes to be loss-making within the first quarter,” Oswald Clint, an analyst at Bernstein Analysis in London, wrote in an e-mail.
To take care of the dividend regardless of low costs, BP has been chopping prices, which have been $US4.6 billion decrease for the final 4 quarters mixed than in full-yr 2014. The corporate has not solely been decreasing its employees by hundreds but in addition paring its sponsorship of the humanities. This yr, the corporate stated it will finish its help for the Tate museums in Britain.
Commercial
BP’s chief government, Robert W. Dudley, who has been extra pessimistic about oil costs than some business colleagues, appeared to detect brightening prospects.
“Market fundamentals proceed to recommend that the mixture of strong demand and weak provide progress will transfer international oil markets nearer into stability by the top of the yr,” Dudley stated in a information launch Tuesday.
The typical worth of Brent crude, the worldwide benchmark, slumped to the bottom in virtually 12 years within the quarter. Whereas Brent’s decline under $US28 a barrel in January minimize earnings from manufacturing, it made crude cheaper for BP’s refineries. Dudley has trimmed billions of dollars of spending, minimize hundreds of jobs and deferred tasks to climate the oil-market rout.
The corporate reported adjusted revenue earlier than curiosity and tax of $US1.eight billion from its downstream operations, sixteen per cent decrease than a yr earlier however forty nine per cent larger than the previous quarter. Within the upstream enterprise, which incorporates oil and fuel manufacturing, BP posted a $US747 million loss in contrast with a $US604 million revenue a yr earlier.
Upstream losses have been about thirteen per cent decrease than expectations, analysts at Exane BNP Paribas stated in a word to shoppers. Downstream earnings have been about 60 per cent forward of analysts’ estimates. About half of the beat in downstream revenue got here from buying and selling, Gilvary informed analysts on a convention name.
“Decrease prices, robust refining operations and an improved provide and buying and selling contribution greater than offset the impression of the weaker refining surroundings and the seasonal discount in fuels gross sales,” BP stated within the assertion.
The corporate began slicing prices and promoting belongings following the 2010 oil spill within the Gulf of Mexico. A $US20.eight-billion settlement associated to the spill was permitted this month and it “removes uncertainties” for BP, Jon Rigby, a London-based mostly analyst with UBS Group, stated in a observe.
Complete is scheduled to publish first-quarter earnings on Wednesday. Exxon Mobil and Chevron will announce outcomes on April 29 and Royal Dutch Shell on Might four.