Oil giant BP Plc said it had increased its cost-reduction targets for this year by 50 percent to US$3 billion and reported a plunge in second quarter profits as a result of lower oil prices and weaker refining margins.
Europe’s second-largest oil company by market value said yesterday it had achieved its original target for the year of US$2 billion in cuts in the first half of the year, confounding analysts who predicted the industry would be unable to roll back the big cost rises of recent years.
“We will continue to push efficiencies into the group and make sure every dollar counts,” chief executive Tony Hayward said in a statement.
Oil companies are reacting to the collapse in oil prices from a high above US$147 per barrel last July to around US$70 per barrel now by slashing exploration, production and refining costs, which have doubled since 2004.
BP said its replacement cost net profit, which strips out unrealized gains or losses related to changes in the value of inventories, was US$3.14 billion in the second quarter.
Excluding one-off items, replacement cost net profit was US$2.94 billion, ahead of an average forecast of US$2.81 billion from a Reuters poll of eight analysts.
Dealers predicted that BP shares would open 2 percent higher on the news.
BP said production of oil and gas rose 4 percent in the quarter compared with the same period last year to 4 million barrels of oil equivalent per day as new fields ramped up.
BP is the first of the top tier of Western oil companies to report their second quarter results.
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