The news saw Shell fall over 3% in sympathy; the twin declines accounting for over half of the FTSE’s fall on Tuesday morning.
Dragging the index even lower was the almost 7% slump seen in BHP Billiton stock on the back of a credit downgrade by Standard & Poors.
BP
According to BP, the $2.2bn loss, which is substantially larger than the $969m loss incurred in the comparable period in 2014, was “predominantly driven by the impact of steeply lower oil and gas prices on BP’s Upstream segment” which reported an underlying replacement cost loss of $728m for the quarter. This was exacerbated by restructuring costs which amounted to $1.5bn by the end of the year.
“A further $1.0 billion of restructuring charges are expected to be incurred in 2016,” BP said.
As part of these costs the oil and gas major said it expects to reduce the number of staff and contractor roles in the Upstream segment by around 4,000 during the year and by up to 3,000 from the Downstream by the end of 2017.
While the costs incurred as a result of restructuring were significant, they have helped the firm to reduce annual controllable cash costs by $3.4bn in 2015, with the firm on track to reach its $7bn cost reduction target by 2017, it said.
Bob Dudley, BP group chief executive, said: “We are continuing to move rapidly to adapt and rebalance BP for the changing environment. We’re making good progress in managing and lowering our costs and capital spending, while maintaining safe and reliable operations and continuing disciplined investment into the future of our portfolio.
“Our plans set out a clear course for BP for the medium term and will allow us to deliver growth in the longer term. All of this underpins our commitment to sustaining our dividend and then growing free cash flow and shareholder distributions over the long term.”
At an underlying level, however, it is worth noting that while profits fell sharply, from over $12bn in 2014, to $5.9bn, the firm has maintained its dividend at 10c per share payable in March.
In terms of production, BP said underlying production is liable to be broadly flat year on year, while it expects prices to continue to be challenging in the near term.
