Russia and weak oil price savage BP's profit

BP’s profits dived by 39 per cent in first quarter

BP chief executive Bob Dudley (Reuters)

BP’s profits dived by 39 per cent in first quarter as the sliding oil price took its toll on the bottom line.

The FTSE 100 oil giant reported a $2.1bn (£1.4bn) profit for the first three months of 2015, down from $3.5bn a year earlier.

“We are resetting and rebalancing BP to meet the challenges of a possible period of sustained lower prices. Our results today reflect both this weakening environment and the actions we are taking in response,” BP chief executive Bob Dudley said.

The oil price, which stood at $115 a barrel last summer, has tumbled to about $64 a barrel now, dragged down by a glut of supply created by the US shale oil boom.

“We are continuing to progress our planned divestment programme, we are resetting our level of capital spending, and we are addressing costs through focusing on simplification and efficiency throughout BP,” he added.

The company’s bottom line also suffered from its exposure to sanctions-hit Russia through its near 20 per cent stake in Rosneft.

The results come after it emerged that the British Government would step in to potentially prevent BP falling into the hands of a foreign buyer in the event of a takeover bid.

The company has been consistently touted as a target since the Gulf of Mexico disaster in 2010 badly hit its share price and profits, and analysts say the low oil price makes it even more vulnerable.

The Government is so worried about the potential for the UK to lose yet another key company to a foreign buyer that David Cameron’s office and BP have had a series of conversations in recent months, including as recently as the past few days, according to reports.

BP said it would pay a quarterly dividend of 10 cents a share, unchanged from last year, as the group reaffirmed its commitment to maintaining the dividend.

BP’s shares fell 0.8p to 476.1p.

BP is the first of the big oil companies to report its first-quarter results, with Shell and Exxon Mobil set to unveil their latest numbers.