BP yesterday joined a list of energy giants planning to slash investment this year as tumbling oil prices bite into group profits.
Spending in 2015 was expected to total about $20bn (€17.6bn), down from a previous guidance of $24-26bn, BP said in a results statement.
And smaller British rival BG Group revealed it would cut investment by about $3.0bn this year.
“We have now entered a new and challenging phase of low oil prices through the near and medium term,” BP chief executive Bob Dudley said in the earnings statement.
“Our focus must now be on resetting BP: managing and rebalancing our capital programme and cost base for the new reality of lower prices while always maintaining safe, reliable and efficient operations.”
BP said underlying replacement cost profit—a measure of earnings watched by the market—dropped almost 10% to $12.1bn in 2014 compared with a year earlier.
BP booked a $3.6bn net charge in the fourth quarter, which it said reflected “the impact of the near-term lower oil price environment, revisions to reserves and other factors”.
As a result it reported a replacement cost loss of $969mn for the final three months of last year.
BP’s annual net profit tumbled to $3.78bn from $23.45bn in 2013 but the figure was skewed by a huge one-off gain the previous year earned from the sale of its interest in joint venture TNK-BP to Russia’s Rosneft.
The group’s share price rallied despite yesterday’s results, winning 2.54% to 448.80 pence on London’s FTSE 100 index, which was up 1.18% at 6,862.85 points in late morning trade.