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LONDON (Alliance News) - BP PLC on Tuesday reported a steep drop in earnings and revenue in the third quarter of the year as a result of lower world oil prices, but said it is committed to sustaining its dividend and plans to have "balanced cashflows" by 2017.
The FTSE 100-listed oil and gas major reported a replacement cost profit of USD1.23 billion in the third quarter of 2015, a steep fall from the USD2.38 billion profit reported a year earlier as revenue fell to USD55.87 billion from USD94.76 billion.
Revenue fell due to the drop in oil prices, which offset a 4.4% year-on-year rise in production during the quarter, which ended September 30.
Pretax profit dropped to USD865.0 million in the quarter compared to USD2.61 billion a year ago.
Despite the large drop in earnings, BP maintained its interim dividend of 10.0 cents per share from the second quarter. Last year, BP paid 9.75 cents per quarter in interim dividends.
BP booked a USD426.0 million net pretax charge in the third quarter to cover costs of the Gulf of Mexico oil spill in 2010, pushing it up to USD11.51 billion in the first nine months of 2015.
Including those charges, net cash generated by operating activities fell to USD5.20 billion from USD9.40 billion a year ago. Excluding those charges, it came in at USD5.40 billion.
Net debt at the end of the quarter stood at USD25.60 billion, up from USD22.40 billion a year ago, as BP's finance costs rose to USD474.0 million from USD358.0 million a year ago.
Capital expenditure was down to USD4.30 billion in the quarter compared to USD5.30 billion a year ago as the oil giant continues to restrict expenditure and cut costs to battle the current downturn.
"Compared with a year earlier, the result primarily showed the impact of sharply lower oil and gas prices but also the benefits of a continuing strong downstream environment and performance and steadily lower cash costs throughout the group," said BP.
The company said it plans to "balance its organic sources and uses of cash by 2017" on a USD60 per barrel assumption and committed to sustaining its dividend and "growing distributions in the long term".
"Last year, we acted decisively to reset BP for a sustained period of lower oil prices and the results are coming through well. We are now in action to rebalance our financial framework in this new price environment," said Chief Executive Bob Dudley.
"And I am confident that BP's strong and well-balanced portfolio of businesses and projects gives us the ability to grow value into the future. All of this underpins our strong priority of sustaining our dividend and then growing free cash flow and shareholder distributions over the long term," he added.
Part of that reset was to divest from USD10.0 billion worth of assets, and as of Tuesday, the oil major had disposed of USD7.80 billion worth of projects, of which around USD300.0 million was generated in the third quarter.
Last Thursday, BP signed a framework agreement with China National Petroleum Corp for a strategic cooperation covering potential shale gas exploration and production in the Sichuan Basin, alongside fuel retailing opportunities, as part of Chinese President Xi Jinping's visit to London.
BP also announced plans to invest USD229.0 million with several partners in three new exploration blocks in Egypt.
By Joshua Warner; joshuawarner@alliancenews.com; @JoshAlliance
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