BP profits and spending slump due to tanking oil price

BP has said it will scale back capital spending for the year by about $7 billion

BP’s shares fell 1.4% yesterday following the US government Russian sanctions (Getty)

The oil giant BP has reported third quarter profit of $1.8 billion, down 40 per cent on the $3 billion recorded in the same period last year.

The result showed the impact of the crude oil price halving in the last year.

BP has said it will scale back capital spending for the year by about $7 billion and make further cuts in 2017 to cope with the price staying at $60 a barrel.

"Last year, we acted decisively to reset BP for a sustained period of lower oil prices and the results are coming through well. We are now in action to rebalance our financial framework in this new price environment,” Bob Dudley, CEO, said.

The company reported underlying replacement cost profit – its definition of net income – of $1.8 billion for the quarter, which was better than the $1.2 billion analysts expected.

BP said the total cost of the Deepwater Horizon oil spill would reach $55 billion, higher than previous estimates. To meet costs, BP is selling off assets amounting to $10 billion this year and a further $3 billion to $5 billion next year.