BP's profit tumbles, debt climbs as virus crisis hammers oil demand

BP's profit tumbles, debt climbs as virus crisis hammers oil demand

BP's first quarter profits tumbled by two-thirds as the coronavirus crisis hammered oil demand and the energy major's debt rose sharply as it warned of exceptional uncertainty ahead.

Ciara Lee reports

A warning of exceptional uncertainty ahead came from BP on Tuesday (April 28).

The oil major's first-quarter profits tumbled by two-thirds as the crisis hammered demand and its debt rose sharply.

London-based BP said it expected significantly lower refining margins in the second quarter when global restrictions on movement reached their peak.

The firm reported an underlying replacement cost profit, its definition of net income, of $800 million.

That beat the $710 million forecast by analysts.

But it was down from the $2.4 billion profit a year earlier.

BP, like its peers, responded to a 65% drop in oil prices in the first quarter by sharply reducing spending.

It slashed its 2020 budget by a quarter to around $12 billion and reduced output at its U.S. shale operations.

Debt hit $51.4 billion in the first quarter and its debt-to-capital ratio rose to 36%, significantly higher than its target of 30% or less.

Oil prices slumped again on Tuesday amid concern about dwindling capacity to store crude worldwide.

There is also a fear that fuel demand may be slow to pick up once countries ease restrictions.

U.S. benchmark crude was down 20% to around 10 dollars a barrel.

Meanwhile BP shares were down over 2% on an otherwise up morning for stocks.