BP narrows losses to £335m as cost-cutting offsets oil price falls
Under-fire oil giant BP narrowed losses in the first three months of the year as swingeing cost-cutting helped it offset falling crude prices.
The blue chip posted replacement cost losses of 485 million US dollars (£335 million) for the first three months of the year, down from losses of 2.2 billion US dollars (£1.5 billion) in the previous three months.
On an underlying basis, the group also defied expectations for a loss, posting adjusted profits of 532 million US dollars (£367 million), although this still marked a 79% plunge on the 2.58 billion US dollar (£1.8) profits a year earlier.
The update comes less than two weeks after BP suffered an investor rebellion over its chief executive's pay deal at its annual general meeting , when almost 60% of shareholders rejected its remuneration report for the last year, which included a salary package of 19.6 million dollars (£13.8 million) for boss Bob Dudley.
Its figures show t rading has improved markedly since a dire end to 2015, with oil prices touching near 13-year lows.
The global commodity price rout saw the cost of crude drop to 34 US dollars a barrel on average in the first three months of 2016 compared with 54 US dollars a year ago.
The oil price crash left BP nursing its largest annual loss for at least 20 years, slumping into the red by 5.2 billion US dollars (£3.6 billion) in 2015, surpassing even the mammoth losses seen in the wake of the Deepwater Horizon explosion and oil spill in the Gulf of Mexico in 2010.
While BP's losses have narrowed in the first quarter of 2016, it still compares with replacement cost profits of 2.1 billion US dollars (£1.4 billion) a year earlier.
The group has been slashing costs and axing jobs, cutting around 10% of its workforce to offset the tough trading.
It said spending fell to 11% year on year in the first quarter and was expected to reach 17 billion US dollars (£11.7 billion) in 2016, but added it could cut this further to between 15 billion (£10.3 billion) and 17 billion dollars (£11.7 billion).
Shares in the group - a mainstay of British pension funds - rose 3% on the better-than-feared underlying figures.
Analysts had expected losses of 140 million US dollars (£96 million).
The cost of crude has bounced back in recent weeks, now trading at around 45 US dollars a barrel, while BP is also beginning to see the benefits of swingeing cost-cutting actions.
Mr Dudley said: "Despite the challenging environment, we are driving towards our near-term goal of rebalancing BP's cash flows."
He added that oil prices were expected to recover further.
"Market fundamentals continue to suggest that the combination of robust demand and weak supply growth will move global oil markets closer into balance by the end of the year," he said.
Joe Rundle, head of trading at ETX Capital, said overall BP posted a "good set of figures", but added that the results may "stick in the throat of some investors" in light of Mr Dudley's pay deal.
"While this shows progress, it needs to do more to cut costs," he said.
BP also revealed it was still counting the cost of the Deepwater Horizon blast six years ago this month.
It took another 917 million US dollars (£627 million) in charges during the first quarter alone, taking its total bill so far to a mammoth 56.4 billion US dollars (£38.6 billion).
The Deepwater Horizon disaster killed 11 workers in April 2010 and sparked a devastating oil spill in the Gulf of Mexico.
BP was thrown into crisis and has since been forced to sell more than 40 billion US dollars (£27 billion) in assets as part of a recovery plan and has announced 7,000 job cuts since the start of last year.