Business
BP posted a $4.4 billion net loss in the fourth quarter of 2014, due mainly to lower global oil prices. Planned investments will be scaled back as the company prepares for oil prices to remain low for the near future. 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, reports The New York Times. 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.
The Wall Street Journal noted that for the full year, BP reported a replacement-cost profit of $8.07 billion, compared with $23.61 billion for 2013. BP’s net loss for the quarter was $4.41 billion, compared with a profit of $1.04 billion in the same period last year, on revenue down 21% to $74 billion. Net profit for the year fell to $3.78 billion from $23.45 billion, on revenue down 6.7% to $353.57 billion. BP’s earnings only capture a portion of the recent oil-price decline, since much of it happened after the quarter closed; the price for benchmark Brent crude averaged about $77 a barrel in the fourth quarter.
BP also said it would sharply reduce capital spending, continued the New York Times, to roughly $20 billion from about $23 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. Mr. 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.
Meanwhile, Reuters reports that it may be months before a final verdict is issued on the size of the fine BP Plc will pay under the Clean Water Act for its 2010 Gulf of Mexico oil spill, lawyers said on Tuesday after the last phase of the trial ended. In arguments that wrapped up on Monday, BP tried to whittle away at $13.7 billion in potential fines if faces under the Clean Water Act for the worst offshore disaster in U.S. history. The Clean Water Act penalties would come on top of more than $42 billion the oil major has set aside for cleanup, compensation and fines.
