BP warns on oil price after announcing US$6.3B loss

BP, one of the world’s biggest oil companies, announced a second-quarter replacement cost loss of US$6.3 billion Tuesday, and warned that low oil prices are here to stay.

Bob Dudley, chief executive of the oil major, said in a statement that the “external environment remains challenging.”

“In the past few weeks oil prices have fallen back in response to continued oversupply and market weakness and the recent agreements regarding Iran. I am confident that positioning BP for a period of weaker prices is the right course to take, and will serve the company well for the future,” he added.
The replacement cost measure takes into account changes in the price of oil and is used across the industry to report earnings.

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It includes a near-US$10 billion extra charge related to the environmental costs of the Gulf of Mexico oil spill, which brought the total pre-tax charge for the disaster to US$54.6 billion.

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The price of oil has plunged in the past year, and crude oil futures hit a four-month low Monday, suggesting that the rout is far from over. During BP’s second quarter, the Brent crude price averaged US$62 a barrel, up slightly from US$54 a barrel in the first quarter.

The company said its capital expenditure will now come in at less than the expected US$20 billion for this year.

Its cash costs in 2015 to date are around US$1.7 billion lower than at the same time in 2015, as it continues cost-cutting program. – CNBC