BP said Tuesday that its oil and gas production fell year on year during the second quarter of 2016 but that it was on track with further spending cuts and expected capital spending to come in below budget this year.
Excluding BP's 20% share of Russia's Rosneft, its upstream production was 2.09 million b/d of oil equivalent in Q2, 1% lower than a year earlier, mainly due to higher maintenance.
Looking ahead, BP said it expects Q3 production to be lower than in Q2 due to seasonal maintenance and an outage at the Pascagoula gas processing plant in the Gulf of Mexico.
BP has said that it sees full-year 2016 underlying production to be broadly flat from 2015's 2.26 million boe/d, excluding Russia.
The oil major said it was making progress with efforts to slash costs to ride out lower oil prices. BP said its organic capital expenditure for the first half of 2016 was $7.9 billion and that it now expects full year 2016 capital expenditure to be below $17 billion. Previous guidance was for 2016 capex of around $17 billion.
"We are delivering significant improvements to the business that will stick at any oil price. We are now well down the path of transforming our business to compete, whatever the future holds," CEO Bob Dudley said in a statement.
BP reported an underlying replacement cost profit for the quarter of $720 million, down from $1.3 billion for Q2 2015. BP reported a $1.4 billion loss for the quarter, however, after taking a $2.8 billion one-off charge including a further charge for Gulf of Mexico oil spill liabilities.
BP confirmed that a $5.2 billion pre-tax charge for the spill takes the total cumulative pre-tax charge for the Deepwater Horizon incident to $61.6 billion.
Downstream, BP said its underlying pre-tax replacement cost profit of $1.5 billion was down from $1.9 billion in Q2 2015 after lower costs and a stronger fuels marketing performance were affected by weaker refining margins.
BP said that its average refining margin fell to $13.80/b in the quarter, down from $19.40/b a year ago.
In Q3, BP said it expected turnaround activity to remain high, at a similar level to Q2, and that industry refining margins will continue to be under "significant pressure".
