BP Q1 Earnings: Revenues And Profits Suffer Due To Low Oil Price Environment, Cash Outflows Still Greater Than Inflows

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BP Plc. (NYSE:BP) released its 2016 first quarter earnings report recently. [1] The company’s upstream price realizations continue to suffer due to the prevalent low oil price environment. As a result, BP’s revenues and earnings have taken a massive hit in the first quarter, with the only saving grace being that the profit estimates came in better than analyst expectations. [2]

BP Earnings Q1 2016

BP has taken measures in the last few quarters to reduce its capital spending and overall cost structure in order to be able to better steer through the commodity trough. However, even with all the spending cuts, the cash outflows were greater than cash inflows for 2015 and the trend continued in Q1 2016.

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BP Q1 2016 Reporting

BP Q1 2016 Reporting

If the price realizations continue to stay at these depressed levels for longer periods, the company will find it extremely hard to sustain its dividend program without resorting to external borrowing.

 

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Notes:

1) The purpose of these analyses is to help readers focus on a few important things. We hope such lean communication sparks thinking, and encourages readers to comment and ask questions on the comment section, or email content@trefis.com
2) Figures mentioned are approximate values to help our readers remember the key concepts more intuitively. For precise figures, please refer to our complete analysis for BP
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Notes:
  1. First quarter 2016 results, 26 April, 2016, BP Press Release []
  2. BP Reports Surprise Profit on Strength in Refining, Trading, April 26, 2016, Bloomberg []