Dudley to outline prospects
BP sees profits plunge following oil price fall
BP saw its profits fall by almost half as a result of the collapse in the oil price.
The company reported underlying replacement cost profit of $1.8 billion for the quarter, compared $3bn for the third quarter of 2014.
It said that compared with a year earlier, the result primarily showed the impact of sharply lower oil and gas prices but also the benefits of a continuing strong downstream environment and performance and steadily lower cash costs throughout the group.
Chief executive Bob Dudley and chief financial officer Brian Gilvary will tell investors today how the company will respond to lower oil prices and how it expects to balance its organic sources and uses of cash by 2017 in a $60 per barrel price environment. They will also provide an update on BP’s major projects progressing over the next few years.
Mr Dudley said: “Last year, we acted decisively to reset BP for a sustained period of lower oil prices and the results are coming through well. We are now in action to rebalance our financial framework in this new price environment.
“And I am confident that BP’s strong and well-balanced portfolio of businesses and projects gives us the ability to grow value into the future. All of this underpins our strong priority of sustaining our dividend and then growing free cash flow and shareholder distributions over the long term.”
Russ Mould, investment director at AJ Bell, said: “BP’s commitment to maintaining its dividend despite significant falls in headline earnings and profits is a significant silver lining in an other wise murky set of results. BP is expected to be the third individual biggest payer of FTSE 100 dividends in 2016 so a progressive dividend policy will be welcomed by investors and the markets.
“Although earnings are down significantly on the comparative period, they beat consensus as markets have already factored in a plunge in oil and gas firms’ earnings from £38.7bn in 2010 to £21.1bn in 2016. This is one key reason why the FTSE 100 is expected to earn less next year than it did in 2010 – aggregate pre-tax profit of £170.5bn, down from £183.2bn.”