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LONDON (Alliance News) - BP PLC Tuesday said its pretax profit for the first quarter of 2015 was substantially lower than a year ago after its upstream division was hit by lower oil prices and reduced activity, partially offset by the downstream division which experienced a lift in earnings.
The FTSE 100-listed oil and gas major reported a pretax profit of USD2.27 billion in the first quarter of 2015, significantly down from USD5.27 billion a year earlier as revenue tumbled to USD54.92 billion from USD92.98 billion as its upstream division took a substantial hit, partially due to lower oil prices and reduced activity.
Its closely-watched replacement cost profit before tax was USD1.87 billion in the first quarter of 2015, down from the USD5.53 billion profit BP reported a year earlier.
The upstream division, which involves exploration and production, saw replacement cost profit before tax fall to USD372 million in the quarter compared with a USD4.65 billion profit a year earlier. The result reflected significantly lower liquids and gas realizations, and lower gas marketing and trading results compared with strong results in the first quarter last year, partly offset by increased production and lower costs.
Production from the upstream division averaged 2.30 million barrels of oil per day, up 8.3% from a year earlier due to a ramp up of major projects which started up in 2014, said the company. BP warned that production in the second quarter is due to fall due to maintenance work.
The downstream division reported a rise in profit to USD2.08 billion from USD794 million, driven by increased demand for the fuels, lubricants and petrochemical businesses. BP said it expects refining margins to be similar in the second quarter as they were in the first, with turnaround activity increasing "significantly".
BP generated a profit of USD183 million from its stake in Russia's Rosneft, down from USD518 million a year earlier, despite production in the quarter rising from a year earlier and remaining flat quarter on quarter at 1.02 million barrels per day. BP has a 19.75% interest in the Russian oil company.
BP said its quarterly dividend will be 10.00 cents per share.
All amounts relating to the Gulf of Mexico oil spill have been treated as non-operating items, with a net pre-tax charge of USD332 million for the first quarter.
At the end of March, net debt stood at USD25.1 billion, slightly down from USD25.3 billion a year ago and the company spent USD4.5 billion in capital expenditure in the period, down from USD5.4 billion.
By Joshua Warner; joshuawarner@alliancenews.com; @JoshAlliance
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