The continuous decline in oil prices has lead to lower profit reports from BP. Following this the oil giant has announced spending cuts to its exploration budget. In the last quarter of 2014, underlying profits were down 20% to $2.2bn than the same period in 2013; and over the whole year, profits dropped by 10% to $12.1bn. The company has said it will be cutting capital expenditure in the wake of their profit announcements from $4bn-6bn in 2014.
In the last 6 months, the price of oil has decreased by half which has resulted in a 16% dip in BP’s share price. The drop in oil price has also led to the company writing down $3.6bn of assets to mirror the fall in value of its operations and reserves.
BP holds a 20% share in Russian energy company Rosneft dropped from $1.1bn to $470m in the final three months of 2014. The reason for this is the economic sanctions that have been placed on Russia in retaliation to its conflict in Ukraine and a weak rouble.
The company also faced legal and cleaning costs relating to the 2010 oil spill in the Gulf of Mexico which have totalled, $477m in the final quarter. Although BP have suffered some serious setbacks, analysts have praised the company’s resilience in the current market conditions.