BP is bracing for at least another two years of low oil prices, it announced this morning, with plans for a financial overhaul that will strip up to $16 billion from its capital budget, cash costs and oil assets through 2017—forfeiting some growth to help restore a global market in disarray.
As FuelFix.com reports, the British oil major says its plan for the next two years will keep its shareholder dividend intact and bring its cash flow in line with costs by 2017 even if crude prices stick around $60 a barrel.
BP kicked off Big Oil’s third-quarter earnings season by taking the same gloomy view on the struggling oil market it has held since the global oversupply sent crude prices hurtling down last year. The company has largely been vindicated in its forecast as surging supplies from the Organization of Petroleum Exporting Countries and sluggish global demand have kept oil cheap for more than a year.
“Last year, we acted decisively to reset BP for a sustained period of lower oil prices and the results are coming through well,” BP CEO Bob Dudley says in a written statement accompanying its report on third-quarter earnings. “We are now in action to rebalance our financial framework in this new price environment.”
BP’s profits fell 48% in the third quarter as low crude prices continued to batter its oil-production business, though the decline was offset by its higher-performing refining unit, which benefits when its raw materials like oil and gas are cheap. The group’s third-quarter profit came in at $1.23 billion, or 40 cents a share, down from the $2.39 billion, or 78 cents a share, it took in the same time last year. Its revenues fell sharply from $94.8 billion to $55.9 billion.
