BP in new spending curbs as lower oil price takes toll

OIL major BP took another axe to investment plans today as the bluechip company’s profits took another beating on low crude prices and squeezed refining margins.

Profits for the April-June quarter slumped by 45% on last year to just $720 million (£550 million) — $120 million below City hopes and driving the shares down 6.15p, or more than 1%, to 434.25p.

Chief executive Bob Dudley said BP expects “the environment to remain challenging”. He added that full-year capital expenditure would come in below the $17 billion target that had previously been given.

BP’s margins per barrel of oil are down by a third on last year while the average cost of a barrel of Brent crude was $47.03 over the quarter compared with $63.50 in 2015.

The results also included a charge of $5.2 billion over the Deepwater Horizon catastrophe in the Gulf of Mexico in 2010, which killed 11 workers. The total costs of the disaster have now been largely capped at $62 billion.

“We are very pleased to have finally drawn a line under the material liabilities for Deepwater Horizon. We will always be mindful of what we have learned from that tragic accident,” Dudley added.

The pressure the oil industry is under after two years of low prices was underlined today as 400 staff working for oil and gas engineer Wood Group went on a 24-hour strike on seven Shell North Sea rigs in protest at planned cuts to pay and conditions.

Further strikes are planned in the first industrial action of its kind in the offshore oil and gas sector for almost 30 years.