The report, published 28 July, showed a $1.3bn (£833m) underlying replacement cost profit in the three months to 30 June – a 50% slice off the $2.3bn (£1.67bn) recorded in Q1, and a 63% fall year on year.
Replacement cost profit or loss reflects the replacement cost of inventories sold in the period and is arrived at by excluding inventory holding gains and losses from profit or loss.
Furthermore, the firm revealed a replacement cost loss of $6.3bn (£4bn) following a $10.8bn (£6.9bn) non-operating pre-tax settlement stemming from the 2010 Deepwater Horizon spill, taking BP’s total bill from the accident to $54.6bn (£35bn) to date.
While the price of Brent crude exhibited a higher Q2 average than in the first three months of 2015 – $62 a barrel against $54 – the price median has since regressed to $58 in Q3 thus far.
Off the back of this slide, BP announced that its organic capital expenditure for the year will be below the $20bn (£12.8bn) figure outlined in February, which was in itself a reduction on the previous guidance of $24-26bn. Organic capital expenditure for Q2 was $4.5bn (£2.9bn), taking the 2015 total to $8.9bn (£5.7bn) so far.
“The external environment remains challenging, but BP moved quickly in response and we continue to do so,” said BP group CEO Bob Dudley. “Our work to increase efficiency and reduce costs is embedding sustainable benefits throughout the Group and we continue with capital discipline and divestments.”
“We can see clear progress in our capital programme and from our work to reset and reduce cash costs,” added Brian Gilvary, BP’s CFO. “Our focus remains on rebalancing the company’s sources and uses of cash in a lower price environment.”
BP’s operating cash flow dropped 20% year-on-year, down from $7.9bn (£5.1bn) to $6.3bn (£4bn), while the firm’s net debt was cut by $293m (£187.7m) in Q2 to $24.8bn (£15.9bn) – a gearing equivalent of 18.8%.
Both the firm’s Upstream and Downstream segments experienced quarter-on-quarter profit slides, with Upstream reporting underlying pre-tax replacement profit of $500m (£320.4m) for the quarter against $600m (£384.5m) in Q1, while Downstream made $1.9bn (£1.2bn) and $2.2bn (£1.4bn) in the respective periods.
In light of the figures, BP has announced a shareholder dividend of 10¢ (6p) per ordinary share for the quarter, forecasted to be paid in September.
