BP may be forced to issue more cuts as profits slump 80%

BP

Despite cutting costs BP is still hurting from the oil crash and may be forced to issue more cuts.

The company experienced a second consecutive quarterly loss after three rounds of spending cuts that witnessed thousands of job cuts which will be completed by the end of 2017.

BP posted a net loss of $583 million in the first quarter of 2016. The company reported a profit of $2.8 billion one year prior.

Replacement cost profit, a measure analysts use to see how well oil companies are doing, fell by 80% to $532 million in the first quarter.

In the previous quarter the company reported replacement cost profit of $196 million and $2.6 billion in the first quarter of 2015.

Numbers were better than investors expected and BP shares were trading up 4.5% early on Tuesday.

BP Shares

Oil prices have been bouncing back from their 13-year low in the first quarter to reach just under $40 per barrel.

BP has hinted that more cost cutting is on the horizon. The company lowered the amount it expects to invest to $17 billion in 2016. The company has previously said it would invest $19 billion this year.

BP needs Brent crude to trade between $50 and $55 to generate enough cash to cover investment and pay dividends.

Shareholders are not happy with the company’s performance and recently rejected its plans to give CEO Bob Dudley a 20% pay increase.