BP Plc Profits Slip By Nearly $1 Million Due To decline In Crude Oil Prices

BP Plc Profits Slip By Nearly

BP plc.’s 1QFY15 results, and the reasons and impacts behind the figures.

On Tuesday BP Plc. reported 25% decline in first quarter earnings for fiscal year 2015. This year’s number of $2.6 billion is much lower than previous year’s $3.5 billion.

This sharp decline in profit is due to collapse in commodity prices in the past nine months. Financial Times placed the average price of crude oil at $54 for first quarter FY15 compare to $108 in 1QFY14.The crude oil prices reached its lowest of $45 per barrel in January this year due to oversupply.

BP Plc. finds itself in a difficult position from declining oil prices and continuing consequences of 2010 incident. Like all other major oil companies, BP is trying to cut its costs, including over 800 staff dismissals in the first quarter.

Dr. Brian Gilvary, CFO of BP told shareholders, that the latest layoffs takes the total number of cuts since December 2012 to approximately 3,500 in company’s corporate sector.

Dr. Gilvary also explained the billions of dollar asset disposal and reduction in oil production, corporate units and refining operations. He further said that more job cuts are likely to occur this year.

At the moment, company is emphasizing more refining instead of finding to reduce its cost further. Lately, BP walked out of 2 offshore lease of rig drilling in Gulf of Mexico because it doesn’t have the finances to afford the whole process. This caused the company termination fees of $375  million, which damaged the financial results of first quarter FY 2015.

The revenue of the company in the quarter has declined to$55 billion from $93 billion in first quarter of fiscal year 2014. Its earnings per share dropped to 86 cents in the most recent quarter from $1.15 in 1QFY14. Company’s oil production in US lost around$545 million in the quarter; however the upstream income from operations declined to $1.1 billion from previous $3.7 billion.

Bob Dudley, CEO of BP said the results for the quarters are unsatisfactory but not surprising, and the company was able to perform better than we have expected. This has caused the BP stock to increase by 1% on NYSE yesterday.

BP has paid around $43.8 billion worth of cost associated with oil spill incident. In the meantime, it has also sold assets worth of $7.1 billion earlier this year and aiming to generate around $10 billion from asset divestment.

BP stock was down by 0.99% to $43.16 at market close on Thursday April 30.

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