Low crude prices help drag oil giant BP into the red for the first quarter.
LONDON — BP, the first of the major oil companies to report earnings this week, said Tuesday that it had lost $583 million in the first quarter of 2016, compared with a $2.6 billion profit in the same period last year.
Lower oil prices were behind the loss for BP, whose results were nonetheless better than analysts had expected. That, and the fact that the company said it would keep its dividend at 10 cents a share, helped buoy BP’s share price.
In the current environment, analysts say an oil company’s stock price is largely determined by the dividend. Sustaining it is “the first priority within our financial frame,” BP’s chief financial officer, Brian Gilvary, said Tuesday.
BP said it had lost $1.2 billion in its key oil and gas exploration and production unit, which was a big money earner when prices were high. Oil prices for the quarter averaged $34 a barrel for Brent crude, more than a third lower than a year earlier.
“The entire industry is going to be loss-making in the first quarter,” Oswald Clint, an analyst at Bernstein Research in London, wrote in an email.
To maintain the dividend despite low prices, BP has been cutting costs, which were $4.6 billion lower for the last four quarters combined than in full-year 2014. The company has not only been reducing its staff by thousands but also paring its sponsorship of the arts. This year, the company said it would end its support for the Tate museums in Britain.
BP’s chief executive, Bob Dudley, who has been more pessimistic about oil prices than some industry colleagues, seemed to detect brightening prospects.
“Market fundamentals continue to suggest that the combination of robust demand and weak supply growth will move global oil markets closer into balance by the end of the year,” Dudley said in a news release Tuesday.
Exxon Mobil and Chevron, the two largest U.S. oil companies, are expected to post their results Friday.
This month, BP shareholders dealt a symbolic rebuke to the company by voting against Dudley’s $19.6 million compensation package for 2015. Investors were critical of giving him a 20 percent pay increase in a year when the company reported a $6.5 billion loss. The vote was nonbinding but may influence BP’s treatment of future executive compensation, the company said.
The company also took a $917 million write-off for damage claims from the 2010 Gulf of Mexico oil disaster, bringing total provisions for liabilities from that accident to $56.4 billion.