BP prepares deeper spending cuts as profits fall 80%

BP has said it is prepared to slash capital spending if oil prices continue to slide, as the company announced an 80% fall in profits.

The oil and gas company said it had already cut spending in the first quarter of the year, and expected to spend a total of $17bn (£11.7bn) in 2016. However, this could be cut to $15bn “in the event of continued low oil prices”.

BP cut spending three times in 2015 to $19bn as it faced the worst downturn in the oil sector for at least three decades.

Despite reporting record losses, cutting thousands of jobs, and freezing employees’ pay, the company’s chief executive, Bob Dudley, was awarded a £14m pay package for last year.

Shareholders were left incensed by the decision, and staged a major revolt at BP’s annual meeting two weeks ago, with almost 60% voting against Dudley’s pay.

Oil prices touched a near-13-year low in the first quarter of 2016 contributing to a sharp fall in BP’s profits over the period. It said net profit fell to $532m from $2.6bn in the the first quarter of 2015. However, the results were better than had been expected and BP shares rose just over 3% to 372p.

Announcing the first-quarter results, Dudley said he expected oil prices to start to recover by the end of the year.

“Market fundamentals continue to suggest that the combination of robust demand and weak supply growth will move global oil markets closer into balance by the end of the year,” Dudley said.

Six years on from the Deepwater Horizon oil spill in the Gulf of Mexico, BP made $1.1bn (£756m) of payments in the first quarter. Eleven people were killed in the disaster in April 2010, with 17 others injured.

BP left its first-quarter dividend unchanged at 10 cents per share.