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  • BP posts $US4b quarterly loss in oil slump

    2018 - 07.01

    BP had to mark down the value of its reserves because of the substantial drop in oil prices BP had to mark down the value of its reserves because of the substantial drop in oil prices
    南京夜网

    BP had to mark down the value of its reserves because of the substantial drop in oil prices

    BP had to mark down the value of its reserves because of the substantial drop in oil prices

    Energy giant BP has reported a net loss of $US4.4 billion ($5.6 billion) in the fourth quarter of 2014, attributed mainly to write-offs of about $US5.5 billion on the value of assets in the North Sea and Angola because of lower estimates of reserves and the falling oil price.

    The results from the company, based in London, were yet another demonstration of the damage that the sharp fall in crude oil prices is having on the industry. BP reported a profit of $US1 billion in the same quarter a year ago.

    At the same time BG, another large British oil and gas producer, said it had write-downs of $US8.9 billion in the fourth quarter, largely because of lower-than-expected prices for its oil and gas. The company reported a net loss of $US5 billion for the quarter and a shortfall of about $US1.1 billion for the year.

    BP said that its write-offs came as a result of a review of the amount of untapped resources in its oil and gas fields. A BP spokesman said the company found that its reserves in the North Sea and Angola were smaller than it had estimated. The company also needed to mark down the value of its remaining reserves because of the substantial recent drop in oil prices, the spokesman said.

    In BG’s case, the largest write-downs were on its liquefied natural gas operations in Australia. Because liquefied natural gas prices are indexed to oil prices, the company calculated that the probable lower oil prices in the future meant it needed to write off $US4.1 billion from the value of those facilities.

    BP also said it would sharply reduce capital spending, to roughly $US20 billion from about $US23 billion in 2013. The company plans to cut exploration spending and postpone what it called marginal projects.

    “Our focus must now be on resetting BP: managing and rebalancing our capital program and cost base for the new reality of lower oil prices,” Robert W. Dudley, the company’s chief executive, said in a statement.

    In announcing their quarterly results, other major oil companies like Royal Dutch Shell and Chevron said they planned to reduce capital spending by billions of dollars. And Exxon Mobil indicated Monday that it was in the “early innings” of trying to cut costs.

    Oil prices were rising for a third straight day on Tuesday. Prices, which had been around $US110 a barrel in the summer, had fallen below $US50 per barrel earlier this year.

    Dudley said he expected weak prices to continue for some time because supply continues to substantially outpace weak demand.

    “I think we are probably in for a minimum of a year, and probably several years, of low oil prices,” he told reporters.

    BP’s earnings excluding inventories and one-time items, which are closely watched by investors, came in at $US2.2 billion, down 20 per cent from a year earlier but above the expectations of analysts surveyed by Reuters.

    “BP today is signaling strong flexibility to manage the current trough oil prices,” Oswald Clint, an analyst at Bernstein Research in London, said in a note to clients.

    BP reported a profit of $US470 million from its 20 per cent holding in Rosneft, instead of the loss analysts had expected, because of “hedge accounting” that the state-controlled Russian giant said on Tuesday it was using to offset the impact of the decline of the ruble.

    Profit for the year fell to about $US3.8 billion compared with $US23.5 billion in 2013.

    BP said it would pay a quarterly dividend of 10 US cents a share, due in March, which is 5 per cent higher than the same period a year earlier, but flat compared with its third quarter.

    “Throughout the work to reset BP, the dividend remains the first priority,” Dudley said.

    BP also said it was taking a $US477 million charge for the 2010 oil spill in the Gulf of Mexico, bringing the total charge to $US43.5 billion. The company continues to face legal challenges related to the Deepwater Horizon rig explosion that killed 11 workers and soiled beaches across the Gulf of Mexico.

    BP is in the third phase of a civil case in US District Court in New Orleans that will decide the penalties to be paid for the spill – costs that could hobble the company for a decade or more.

    The US Justice Department is seeking the maximum penalty of $US13.7 billion under the Clean Water Act, while BP is fighting to reduce the fines. The Clean Water Act penalties would come in addition to the $US43.5 billion BP has set aside for cleanup and compensation. More than 810,000 barrels of crude were recovered during cleanup efforts.

    BP won something of a legal victory last month when Judge Carl J. Barbier of the New Orleans court ruled that the size of the spill was 3.19 million barrels, well below the 4.1 million barrels the government had estimated. Had the government persuaded Barbier of its estimate, the company could have faced an additional $US4 billion in fines.

    BP could be fined $US4,300 for each barrel of oil spilled, though Barbier has the authority to set lower penalties. Under the Clean Water Act, the judge assigning penalties should look at the oil company’s ability to pay, its cleanup efforts and its history of violations.

    The New York Times

    This story Administrator ready to work first appeared on Nanjing Night Net.

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