BP joined its rivals in reporting lower first-quarter earnings compared with a year ago as the UK-listed energy major noted weaker prices and refinery margins.
Underlying replacement cost profits, BP’s definition of net income and the measure tracked most closely by analysts, was $2.4bn in the three months to March 31. This compares with $2.6bn in the same period the year before and analysts’ consensus estimates of $2.3bn.
Chief executive Bob Dudley said in a statement: “We produced resilient earnings and cash flow through a volatile period that began with weak market conditions.”
Oil and gas production from BP’s operations rose 2 per cent from a year ago to 3.8m barrels of oil equivalent per day. This took into account new production from the acquisition of BHP’s US shale assets and projects in Trinidad, Egypt and the Gulf of Mexico coming online in 2019.
Still, higher output was offset by lower oil prices, maintenance activity in the Gulf of Mexico and weather disruptions elsewhere in the US.
Meanwhile, lower refining margins were only partially offset by strong marketing and the overall trading business. Downstream results were hit by “lower industry refining margins and narrower North American heavy crude oil discounts”, BP said.
BP has been weighing cash generated from its businesses and divestment proceeds with capital spending, dividends, buybacks and persisting — albeit smaller — claims from the Gulf of Mexico disaster. Oil spill payments in the quarter were $600m.
BP’s results follow a string of peers. Production cuts in Canada and lower natural gas prices took a toll on Exxon Mobil and Chevron in the US. French oil group Total said volatile hydrocarbon prices and debt costs hit first-quarter earnings.
BP plans to sell $10bn of assets over the next two years to help pay for the deal for the BHP deal.
Divestment proceeds tallied $600m for the first quarter.
Gearing, the amount of debt a company has as a proportion of its equity capital, stood at 30.4 per cent at the end of the first quarter compared with 30 per cent at the end of 2018.
BP announced a quarterly dividend of 10.25 cents a share.