The British oil giant has renewed focus on upstream operations to explore and drill for oil and gas worldwide.
As international crude oil prices continue to slide on demand worries worldwide, British oil giant BP PLC Group reported disappointing first-quarter results only days after the company announced a major discovery in the Gulf of America.
“Following the introduction of global tariffs and related government responses, there has been increased market volatility driven by rising concerns around the potential impact of a weaker economic outlook,” said Auchincloss, adding “commodity prices have softened as the market anticipates a potential reduction in demand for oil and gas driven by economic uncertainty.”
As BP posts its first-quarter results and rival supermajors ExxonMobil and Chevron are on tap for later this week, oil prices are under pressure as supply concerns continue to roil global markets, analysts say.
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In London, Brent crude settled at $64.25 per barrel, down $1.61, or 2.4 percent, on April 29, on the International Petroleum Exchange on April 29. West Texas Intermediate, the premium U.S. grade, settled at $60.42 per barrel, down $1.63, or 2.6 percent, on the New York Mercantile Exchange.
If lower commodity prices persist, Auchincloss warned, the company would likely need to offset lower income and cash flow from operations by revisiting its $14.5 billion capital spending plan to fund nearly a dozen major oil and gas development projects worldwide. BP’s previous capital plan outlook in February ranged between $13 billion and $15 billion through 2027, but the current guidance leans toward the lower end.
Still, the BP chief executive said the integrated oil giant remains committed to cutting the company’s enormous $27 billion debt load by between $14 billion and $18 billion through 2027. The company is also considering the possible sale of its Castol Oil business in the Netherlands, valued at $10 billion.
BP’s other cost-saving initiatives include slashing the company’s stock buyback program from $1.75 billion to $750 million and cutting another $4 billion to $5 billion in structure expenses across operations.
“We have extensive experience of managing through many price cycles and know how to navigate a weaker environment should we see a sustained period of lower prices,” said Auchincloss.
Just over a year as CEO, Auchincloss also highlighted the company’s renewed focus on upstream operations to explore and drill for oil and gas worldwide. As part of its global exploration plan, Auchincloss said, the company plans to drill more than 40 wells over the next three years. Among the company’s key developments was a major Far South discovery announced on April 14 in the Gulf of America.
Located in western Green Canyon, approximately 120 miles off the coast of Louisiana, the well was drilled to a total depth of 23,830 feet. Once operational by the decade’s end, Far South is expected to bring more than 400,000 barrels of oil equivalent per day for BP and co-owner Chevron USA, which share a 57.5 percent/42.5 percent stake in the huge oil play.
“This is off to an exceptional start with six discoveries so far this year, including in the Gulf of America, Trinidad, and Egypt, our best quarter for exploration in a very long time,” said Auchincloss.
Since Trump took office, BP has reset and retooled its operations to focus and reallocate capital to the high-return upstream business and reduce its commitment to renewables and climate action. In 2019, BP set one of the world’s most ambitious net-zero policies, establishing a goal for its global operations to be carbon-free by 2050.
In March, however, Auchincloss announced that the company would increase oil and gas spending to nearly $10 billion annually and cut renewable expenditures by a whopping 70 percent.
Companywide, BP also expects to grow its global upstream production to 2.3 million to 2.5 million barrels of oil equivalent in 2030, with the capacity to increase production out to 2035. Around 1 million barrels of oil equivalent per day are expected to be delivered from the U.S. onshore and offshore regions by 2030.
During the conference call, Auchincloss did not mention BP’s ongoing proxy fight with Elliott Management. According to industry reports, the Wall Street activist investment firm recently revealed that it holds a nearly 5 percent stake in the London-based oil conglomerate and is seeking executive, organizational, and operational changes at BP.
