BP PLC on Tuesday said its earnings in the third quarter nearly halved compared with a year earlier, as low oil prices continue to buffet the company’s financial performance.
London-based BP said its replacement cost profit–a number analogous to the net income that U.S. oil companies report–was $1.23 billion, compared with a profit of $2.39 billion a year earlier.
The company’s earnings were dented by a $426 million charge related to its 2010 Gulf of Mexico oil spill and a restructuring charge of $151 million amid consistently low prices. The company said cumulative restructuring charges from the beginning of the fourth quarter of 2014 to the end of 2016 are expected to total around $2.5 billion.
However, BP also laid out a plan to manage the lower oil price environment, reducing costs and spending to a point where it can cover its capital expenditure and dividend from cash flow by 2017 in a $60 a barrel price environment.
The British oil giant announced plans to keep its capital spending in the range of $17 billion to $19 billion over the next two years and reduce cash costs by over $6 billion compared with 2014.
“Our principal objective is to re-establish the balance in BP’s financial framework, with operating cash flow covering capital expenditure and the dividend,” Chief Financial Officer Brian Gilvary said. “We are already making strong progress and the plans we have set out will allow us to achieve this without compromising BP’s core growth options.”