Falling oil sees BP to cut exploration expenditure

BP Plc, Europe’s third-largest oil company, will reduce exploration expenditure and postpone marginal projects in the upstream and downstream segments. For 2015, the company has pared its capital expenditure to around $20 billion, significantly lower than previous guidance of $24-26 billion.

Capital expenditure in 2014 was $22.9 billion, lower than initial guidance of $24-25 billion. “We have now entered a new and challenging phase of low oil prices through the near and medium term,” said Bob Dudley, BP group chief executive.

BP today reported its results for the fourth quarter and full-year 2014. Underlying replacement cost profit for the fourth quarter was $2.2 billion compared with $2.8 billion for the same period in 2013. Full year underlying replacement cost profit was $12.1 billion compared with $13.4 billion reported for 2013.

BP took a $3.6 billion post-tax net charge for non-operating items in the quarter, mainly relating to impairments of upstream assets reflecting the impact of the near-term lower oil price environment, revisions to reserves and other factors. As a result, including this charge and other effects, BP reported a replacement cost loss of $969 million for the fourth quarter of 2014.

BP said it is continuing its work to streamline activity and increase efficiency throughout the Group. Total cash costs for the group fell by over $1 billion in 2014 and BP is in action to deliver further efficiencies in 2015.

In December 2014 BP said that it expects to incur restructuring charges totalling $1 billion over the next five quarters.