Oil giant BP announced a slump in quarterly profits yesterday, but said it continued to steer a steady course through choppy waters.
The haul of £1.9billion between April and June was 53% down on the same period a year ago when crude oil prices were approaching record highs.
Chief executive Tony Hayward said the figure was 30% higher than the first quarter of this year, helped by a 4% rise in BP’s daily production to more than 4million barrels of oil equivalent in the three months.
Despite the inevitable impact of falling crude prices on profits, BP has shown signs of progress in turning around years of underperformance – particularly in refining.
Two years into the turnaround programme, Mr Hayward said BP was making good progress in growing its exploration and production business, as well as turning around its downstream operations and improving efficiency.
He added that its target for a reduction of £1.21billion in costs in 2009 had already been exceeded, with a further £607million saving expected over the rest of the year.
The company reduced staff numbers by 3,000 last year and is on track for another 5,000 by the end of 2009.
Mr Hayward said: “We will continue to push efficiencies into the group and make sure every dollar counts.”
It emerged earlier this month that plans by BP to make cost-cutting moves on its North Sea platforms were to be challenged by contractor employees.
One union official, Jake Molloy, said the first step would be legal moves and there could even be the possibility of industrial action if BP did not rethink.
Mr Molloy, regional organiser for the RMT union in Aberdeen, said several hundred people employed offshore by contractors such as Wood Group, Salamis and Cape could see cuts in their pay packages by between 10% and 20% from October 1.
BP is targeting areas such as automatic nightshift payments to reduce costs in the tougher financial environment.
In addition to cost savings and production gains, BP’s performance against the previous quarter of 2009 has been helped by firmer oil prices amid hopes for a recovery in the world economy. Mr Hayward said: “The overall picture is of energy demand now stabilising following significant falls in the first half of the year.”
He said oil prices were likely to be towards the lower end of a $60-$90 barrel range in the near term.
Analysts said BP’s profits and cost-saving figures were ahead of expectations, although this failed to prevent a 3% fall in its share price yesterday to 503p.
BP’s rival Royal Dutch Shell is also due to report results this week, with analysts expecting second-quarter profits of about £1.45billion.
Shell shares slid 1% to £15.82, while BG Group shed more than 2% at £10.82.
Peter Hitchens, an analyst at broker Panmure Gordon, said BP’s underlying performance appeared to be better than its rivals.
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