BP cuts 2015 budget after swinging to Q4 loss, but underlying profits beat forecasts

The oil major reported a replacement cost (RC) loss of just under $1bn for the three months to 31 December 2014, compared with a profit of $1.5bn in the same period of 2013.

The company took a $3.6bn post-tax net charge for non-operating items, mainly due to impairments of upstream assets as a result of the recent collapse in oil prices, as well as revised reserve estimates.

However, underlying RC profit, its preferred measure of performance, totalled $2.2bn compared with $2.8bn the year before. This came in well above analysts' forecasts of a bigger drop to $1.7bn.

The contribution from BP's 19.75% interest in Russian state-owned oil producer Rosneft sunk to a profit of just $451m from $1.1bn the year before due to the weaker rouble. This was also better than many had feared; some analysts were forecasting a loss on its Rosneft stake for the quarter.

BP held its dividend payment at 10 cents per share, as expected.

"We have now entered a new and challenging phase of low oil prices through the near and medium term," said chief executive Bob Dudley.

BP said it was “taking action” to respond to the likelihood that oil prices would stay low in the medium term.

“In 2015, BP plans to reduce exploration expenditure and postpone marginal projects in the upstream, and not advance selected projects in the downstream and other areas.”

Organic capital expenditure this year is expected to be $20bn, compared with previous guidance of $24bn-26bn and the $22.9bn spent in 2014.