BPs share price fell by 2.4 per cent on the morning of 7 February as it reported a fourth-quarter profit of US$400mn, US$160mn short of what analysts at Reuters were expecting
As BP announced its fourth-quarter results of 2016 on the morning of the 7 February, its share price fell by 2.4 per cent. However, the story is more complex than just a lack of market confidence. For the year 2016, the underlying profits of BP fell to US$2.6bn from US$5.6bn in 2015. The volatile oil prices are largely to blame for this. However, BP also says that significantly lower operating costs affected this figure as well. BP also took an additional charge of US$799mn for the Deepwater Horizon disaster.
"We have adapted by cutting our controllable cash costs by US$7bn from 2014 - a full year earlier than planned. Continued tight discipline on costs remains essential," Bob Dudley, BP group chief executive, said.
Another reason the market lost some confidence in BP is that, while it achieved US$400mn underlying cost replacement profit for Q4 of 2016, Reuters predicted that BP would achieve US$560mn.
BP have announced that when the oil price reaches US$60 per barrel, it will balance the book by the end of 2017. The average price of brent crude in 2016 was just US$44 per barrel, the lowest in 12 years.
The group has been making acquisitions recently, including obtaining Australian petrol stations at the end of2016, agreeing to take a 10 per cent stake in Abu Dhabi Company, giving it access to the emirate's largest oilfields, and taking a stake in exploration areas off the coast of Mauritania and Senegal.
