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BP reports full year results

bpBP reports full year and 4Q 2015 results; 

dividend remains unchanged

BP today reported its results for the full year and fourth quarter of 2015. Underlying replacement cost profit1 for the full year was $5.9 billion, compared with $12.1 billion reported for 2014, down 51%. The underlying result for the fourth quarter was $196 million compared with $2.2 billion for the fourth quarter of 2014.

Underlying operating cash flow2 for the fourth quarter of 2015 was $5.9 billion, bringing the total for the year to $20.3 billion, compared with $32.8 billion for 2014, down 38%.

BP took $2.6 billion in non-operating post-tax charges in the fourth quarter, primarily related to impairments of Upstream assets as well as restructuring charges for the Group. Including these charges and other offsetting effects, BP reported a replacement cost loss for the fourth quarter of 2015 of $2.2 billion.

BP also today announced a dividend of 10 cents per ordinary share for the quarter, payable in March. The dividend remains unchanged. 

Despite strong operational performance and growing cost reductions, the lower underlying result was predominantly driven by the impact of steeply lower oil and gas prices on BP’s Upstream segment, which reported a pre-tax loss for the quarter. This was partially offset by a strong set of counter-cyclical results from the Downstream segment.

The Brent crude oil marker price averaged $44 a barrel in 4Q 2015 compared with $77 a year earlier, and the average Henry Hub US gas marker price was $2.27 per million British thermal units compared with $4.04 in 4Q 2014.

Bob Dudley, BP group chief executive, commented: “We are continuing to move rapidly to adapt and rebalance BP for the changing environment. We’re making good progress in managing and lowering our costs and capital spending, while maintaining safe and reliable operations and continuing disciplined investment into the future of our portfolio.

“Our plans set out a clear course for BP for the medium term and will allow us to deliver growth in the longer term. All of this underpins our commitment to sustaining our dividend and then growing free cash flow and shareholder distributions over the long term.”

BP’s focus on cost discipline and increasing efficiency continues. Annual controllable cash costs in 2015 were $3.4 billion lower than in 2014 and are on track to be close to $7 billion lower in 2017. BP has now completed the $10 billion divestment programme announced in October 2013 and plans a further $3-5 billion during 2016.

Organic capital expenditure for 2015 was $18.7 billion. BP expects annual organic capital expenditure to remain between $17 and $19 billion in 2016 and 2017 and to be at the lower end of that range in 2016. 

“We will keep the capital frame under review as we move through 2016 and beyond,” said Brian Gilvary, BP chief financial officer. “Should current conditions persist for longer than anticipated, we expect that all the actions we are taking will capture more deflation and so drive the point at which we balance our organic sources and uses of cash lower than the $60 per barrel that we indicated at last quarter’s results.”3

BP ended the year with a gearing level of 21.6%. BP intends to continue to manage gearing with flexibility around the 20% level.

BP has taken around $1.5 billion in restructuring charges over the past five quarters; this total is expected to approach $2.5 billion by the end of 2016. BP expects to reduce the number of staff and contractor roles in the Upstream segment by around 4,000 during 2016 and by up to 3,000 from the Downstream by the end of 2017.

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