British oil giant BP today reported a 62% fall in first-quarter net profit due to a collapse in oil and gas prices, but heavy cost-cutting helped it beat all analysts' forecasts.
Europe's second-largest oil company by market value said its replacement cost (RC) net profit fell to $2.39 billion from $6.59 billion last year.
BP said it was reacting to the weaker oil price environment by slashing costs. These fell by $1 billion in the first quarter compared to the same period last year.
The price of Brent crude oil averaged $44 a barrel in the quarter compared to $97 barrel a year earlier and has since recovered to around $50.
Lower industry costs will enable BP to cut its capital expenditure budget to under $20 billion from the $20-22 billion BP said in February it expected to spend this year, a spokesman said.
The spokesman added that the company's lower capital expenditures were in small part due to delays in some projects.
BP's results were helped by a 2% rise in oil and gas production to 4.02 million barrels of oil equivalent per day (boepd), the first time the company topped the 4 million boepd level since the second quarter of 2006.
However, BP's debt levels rose as it borrowed to fund its generous dividend. Gearing rose to 23% compared with 19% last year.
BP needs oil prices of $60 a barrel to generate enough cash to fund investment and pay its dividend, analysts said.
