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Profits halved as Dudley says BP ‘positioning for lower oil prices’

Bob DudleyBP boss Bob Dudley said the company would continue to adjust to the lower oil price as profits halved at the company in the last three months.

Underlying replacement cost profit for the second quarter fell from $2.6 billion to $1.3 billion.

This reflected the impact of continued low oil and gas prices, a reduced contribution from Rosneft in Russia, and one-off charges arising from heightened tensions in Libya.

The company also agreed on 2 July to pay US authorities $9.8 billion for the Gulf of Mexico spill in 2010. It reached agreements in principle to settle all outstanding federal and state claims and claims made by more than 400 local government entities arising from the Deepwater Horizon disaster.

A non-operating pre-tax charge of $9.8bn was included in the result for the second quarter. As a result of this charge, together with other non-operating items and fair value accounting effects, BP reported a replacement cost loss for the quarter of $6.3bn.

Mr Dudley, chief executive, said: “The external environment remains challenging, but BP moved quickly in response and we continue to do so. Our work to increase efficiency and reduce costs is embedding sustainable benefits throughout the group and we continue with capital discipline and divestments.”

In the second quarter the Brent crude price averaged $62 a barrel, compared with $54 a barrel in the first quarter and $110 a barrel in 2Q 2014. In the third quarter to date, the price has averaged $58 a barrel. 

Mr Dudley added: “In the past few weeks oil prices have fallen back in response to continued oversupply and market weakness and the recent agreements regarding Iran. I am confident that positioning BP for a period of weaker prices is the right course to take, and will serve the company well for the future.”

BP announced a quarterly dividend of 10 cents per ordinary share, expected to be paid in September.

On investment, Brian Gilvary, chief financial officer, said: “We can see clear progress in our capital programme and from our work to reset and reduce cash costs. Our focus remains on rebalancing the company’s sources and uses of cash in a lower price environment.”

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