BP profit drops 64%

BP has dropped 5.8 percent this year in London trading.

BP has dropped 5.8 percent this year in London trading.

Published Jul 28, 2015

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London - BP said second-quarter profit tumbled 64 percent as crude prices slumped.

Profit adjusted for one-time items and inventory changes dropped to $1.3 billion from $3.6 billion a year earlier, the London-based company said on Tuesday in a statement. That missed the $1.7 billion average estimate of 17 analysts surveyed by Bloomberg.

Chief Executive Officer Bob Dudley is bracing Europe’s third-biggest oil producer for a longer period of low prices by slashing spending, reviewing projects and selling assets.

Brent crude, a benchmark for more than half the world’s oil, has dropped about 50 percent in the past year. That’s eroded value and forced companies to reduce investment in high- cost projects.

It has also put investors on guard for a steep decline in profitability. Royal Dutch Shell, Total SA, Exxon Mobil and Chevron are all scheduled to report second-quarter earnings this week.

Still, lower prices are making it cheaper for refineries to buy their basic raw material - crude oil. With gasoline and diesel prices falling less than crude, processing plants can earn higher margins.

BP has dropped 5.8 percent this year in London trading. The stock declined in four of the past five years after an oil spill in the Gulf of Mexico in 2010.

Bloomberg

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