28th Apr 2020 08:19
(Alliance News) - Oil major BP PLC on Tuesday reported a sharp drop in first-quarter earnings as the oil and gas industry suffers from supply and demand shocks "on a scale never seen before", but kept its dividend intact.
Oil prices have collapsed as a production war broke out between Saudi Arabia and Russia earlier this year, just as demand was being hit by the Covid-19 pandemic.
Brent was quoted at USD19.12 a barrel early Tuesday, having traded as high as USD66 at the start of 2020.
Earlier this year, BP Chief Financial Officer Brian Gilvary had said for 2020, the company's breakeven price would be around the mid-USD50s mark. On Tuesday, BP said it is aiming to use cost cuts to drive its cash balance point below USD35 a barrel in 2021.
For the quarter ended March 31, underlying replacement cost profit - BP's preferred metric - was USD0.8 billion, down 67% from USD2.4 billion for the same period a year earlier.
The result, BP said, reflected lower prices, sharply lower demand in the Downstream unit particularly in March, a lower estimated result from Rosneft, and a lower contribution from oil trading.
BP holds a 19.75% stake in Russian oil firm Rosneft.
Additionally, BP swung to a replacement cost loss of USD0.6 billion from USD2.1 billion profit in the first quarter of 2019.
BP said it was dealing with an "exceptionally challenging environment" and "demand destruction".
Still, the oil major declared a first-quarter dividend of 10.5 US cents, up 2.4% from 10.25 cents in the fourth quarter and first quarter of 2019.
Turning to its finances, BP said net debt at the end of the quarter was USD51.4 billion, USD6.0 billion higher than a quarter earlier. At the end of the first quarter BP had around USD32 billion of liquidity available, it added.
"At the same time, we are taking decisive actions to strengthen our finances - reinforcing liquidity, rapidly reducing spending and costs, driving our cash balance point lower. We are determined to perform with purpose and remain committed to delivering our net zero ambition," said Chief Executive Bernard Looney.
The stock was down 1.8% at 308.35 pence in early trade in London on Tuesday.
By Arvind Bhunjun; [email protected]
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