After cutting the fall in value of its US shale gas projects and the decision to abandon its offshore drilling programme off the coast of Alaska, shares in BP have fallen sharply.
The figures are nothing but bad news for a company that posted profits of £3.44bn last year. ‘Replacement cost profits’ (profits that are announced in relation to the cost of oil at a given time) have been affected by falling oil prices and the falling price of US shale gas, in which the company has extensive investments.
In a statement to the press, Bob Dudley, BP group chief executive, said in a statement to the press: “We recognise this was a weak earnings quarter, driven by a combination of factors affecting both the sector and BP specifically.
Mr Dudley also pointed out that BP’s turnaround and maintenance programme is affecting the company’s profits. He commented: “All of [the required maintenance] will take time, but it is important investment that will enhance safety and reliability for the long term.”
“Rebuilding trust with our shareholders and other stakeholders is vitally important. We are making progress against the critical strategic and operational targets we have set ourselves and are confident that this will deliver long-term, sustainable value,” he added.
Analysts have pointed out that the company is still licking its wounds after the Deepwater Horizon oil spill, twinned with the £2bn fine it received from the Russian Government for attempting a takeover of the oil giant Rosneft. A group of Russian billionaires launched a successful legal challenge against the bid, but BP says it is appealing against the fine.
