BP Swings into Red in Q1
BP booked a loss attributable to shareholders of $4.37bn for the first quarter, down from a $2.93bn profit a year earlier, it reported on April 28, as the oil price rout and demand destruction caused by Covid-19 lockdowns took their toll.
The main factor behind the UK major's reversal was a $3.74bn inventory loss resulting from the oil price collapse towards the end of the three-month period. However, BP also suffered a replacement cost (RC) loss of $628mn, compared to a $2.1bn income in the first quarter of 2019. Underlying RC profit came in at $791mn, down from $2.36bn.
Operating cash flow plunged to $1.2bn excluding Gulf of Mexico oil spill payments, versus $5.9bn a year earlier. Net debt grew to $51.4bn at the end of March, up $6bn from three months earlier.
Upstream underlying RC profit slumped to $1.87bn in the first quarter, from $2.93bn a year earlier, while downstream income sank to $921mn, from $1.73bn. BP also booked a $17mn underlying RC loss relating to its 19.75% stake in Russian oil firm Rosneft, compared with a $567mn gain a year earlier. The company attributed this loss to lower oil prices, unfavourable foreign exchange and duty lag effects.
Production, excluding from BP's Rosneft stake, was 2.9% lower year on year at 2.58mn barrels of oil equivalent/day.
BP CEO Bernard Looney said the major was "taking decisive actions to strengthen [its] finances – reinforcing liquidity, rapidly reducing spending and costs, driving our cash balance point lower."
BP has cut its capital spending plan for 2020 by 25% to $12bn. Despite the reduction, it still intends to spend $500mn in 2020 on low-carbon activities. It aims to reduce cost costs by $2.5bn by the end of 2021, relative to 2019.
BP says its plan to shed $15bn in assets by mid-2021 remains on track, with the major already having divested $10.1bn since the start of 2019. It just announced it had revised the terms of the sale of its Alaska business to Hilcorp for $5.6bn, and is committed to closing the deal in June 2020.
The major had $32bn in liquidity at the end of March, including a new $1bn revolving credit facility. In April it raised $7bn from bond sales.