BP slides into quarterly loss as low oil prices bite

BP sank into a loss in the first quarter, hit by low crude prices and costs linked to the 2010 Gulf of Mexico oil spill, the British energy giant said Tuesday.

BP announced a net loss of $ 583 million (517 million euros) for the first three months of the year, which compared with a profit after tax of $ 2.6 billion during the same part of 2015.

The company noted that benchmark Brent oil prices averaged $ 34 per barrel in the reporting period, down from $ 54 a year earlier.

“Despite the challenging environment, we are driving towards our near-term goal of rebalancing BP’s cash flows,” chief executive Bob Dudley said in the group’s earnings statement.

BP said it had set aside a further $ 917 million in the first quarter to meet compensation costs linked to the Gulf of Mexico disaster — bringing the total charge to $ 56.4 billion.

“As a consequence of the Gulf of Mexico oil spill, BP continues to incur various costs and has also recognised liabilities for future costs,” said the group statement.

Stripping out exceptional costs and changes to the value of BP’s oil stockpiles, the company reported a net profit of $ 532 million in the first quarter, but down almost 80 percent from a year earlier.

That surprised traders and sent BP ‘s share price jumping because market expectations were for a loss of $ 244.9 million, according to analysts polled by Bloomberg.

Earlier this month, BP shareholders rejected a pay deal worth $ 19.6 million for Dudley, in a symbolic vote in the face of heavy losses and job cuts at the oil giant.

Chairman Carl-Henric Svanberg had told investors that Dudley’s pay packet was justified by a “seriously impressive performance” in volatile conditions but a majority of investors were not impressed.

The London-listed energy group clocked up a loss of $ 6.5 billion last year and recently announced plans to axe another 3,000 jobs, taking its total cull to 11,000 positions since the start of 2015.

In Tuesday trade, BP’s share price finished 4.3 percent higher at 375.90 pence on London’s benchmark FTSE 100 index, which closed 0.4 percent up at 6,284.52 points.

Analysts put the jump down to BP’s underlying performance and a generous dividend payment.

“Shares (Berlin: DI6.BE – news) of BP gained… after the oil major reported a sharp decline in profits and revenues but managed to conjure up results that were better than expectations,” said CMC Markets (LSE: CMCX.L – news) analyst Jasper Lawler.

“BP has made strides in reducing costs and boosted trading revenues in the face of decade-low oil prices and a warm winter that hobbled refining margins.”

The global oil market had nosedived from above $ 100 in mid-2014 to 13-year lows of around $ 27 in February, plagued by the stubborn supply glut. But prices have since rebounded to trade above $ 40 per barrel.