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LONDON — BP plc is adjusting to the current environment of lower oil prices. CEO Bob Dudley said during BP’s 2015 fiscal third-quarter earnings call Tuesday that the company is responding to the lower prices by balancing its organic sources and uses of cash by 2017, when it expects an estimated $60-per-barrel Brent oil price environment.
“Last year, we acted decisively to reset BP for a sustained period of lower oil prices and the results are coming through well,” he said. “We are now in action to rebalance our financial framework in this new price environment.”
The CEO added that BP has a well-balanced portfolio that bodes well for the future. “All of this underpins our strong priority of sustaining our dividend and then growing free cash flow and shareholder distributions over the long term.”
Dudley was specifically impressed with BP’s downstream third-quarter results, under which its retail division is housed. Pre-tax underlying replacement cost profits — a form of reporting earnings in BP’s home country of England — reached $2.3 billion in the third quarter, compared to $1.9 billion in the same period in 2014.
The company cited refining margins and operations, fuels marketing profits, and cost benefits from simplification and efficiency programs as reasons for the year-over-year downstream earnings increase.
Companywide, London-based BP reported an underlying replacement cost profit of $1.8 billion for the fiscal third quarter, vs. a profit of $3 billion in the year-ago period. BP cited “sharply lower oil gas prices” having an effect on the upstream division as reason for the overall earnings decline.
On Tuesday, BP also reiterated that it agreed in principle to settle federal and state claims stemming from the 2010 Deepwater Horizon oil spill. If approved, BP will make principal payments of up to $18.7 billion over an 18-year period.
“BP has successfully adapted to changing circumstances many times in its history and, in a hard time for the entire industry, I believe we will once again successfully take on today’s challenges,” Dudley concluded.