BP said on Tuesday it could cut capital spending further after reporting an 80 per cent drop in profits in the first quarter of the year.
Chief Executive Bob Dudley said that the drop in profit was due weak oil prices, which had touched a near 13-year low.
The British oil company, the first major to report on one of the weakest quarters, lowered its 2016 spending target to $17 billion, from $17-19 billion.
Dudley said the marker could fall to $15-$17 billion next year if oil prices remain weak.
These cost reductions have enabled the oil producer to forecast it can balance its books at an oil price of $50-55 a barrel in 2017, it said, down from $60 previously eyed.
BP shares opened 3 per cent higher on the London Stock Exchange on Tuesday, the second-biggest gainer in the blue-chip FTSE 100 index.
Dudley said he expected crude prices to recover towards the end of the year as producers halt work on fields and fuel demand remains robust.
“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.
The BP CEO suffered an embarrassing shareholder revolt earlier this month when investors rejected his $20 million remuneration package.
Faced with the worst downturn in the oil sector in at least three decades, BP reduced its capital spending three times in 2015 to $19 billion and slashed nearly 10 per cent of its workforce of about 80,000.
BP slipped to its biggest annual loss last year as a result of lower oil prices, costs related to the settlement of a deadly 2010 Gulf of Mexico oil spill and huge writedowns.
BP’s current total charge for the Gulf of Mexico oil spill has risen to $56.4 billion after an additional payment of $917 million in the first quarter outside a settlement reached last year, it added.
BP is the first oil major to reveal the financial impact of record-low oil prices in the first quarter, closely followed by peers Total, Statoil and Eni later this week and Shell on May 4.
BP maintained its dividend at 10 cents per ordinary share. (Reuters/NAN)