- The U.K.-based oil and gas company posted first-quarter underlying replacement cost profit, used as a proxy for net profit, of $800 million.
- That compared with $2.4 billion in the first quarter of 2019, reflecting a fall of 67%.
- BP's results come shortly after a historic plunge in oil prices.
Energy giant BP reported a significant fall in first-quarter net profit on Tuesday, as oil prices continue to dive amid intensifying concerns about the coronavirus crisis and dwindling storage capacity.
The U.K.-based oil and gas company posted first-quarter underlying replacement cost profit, used as a proxy for net profit, of $800 million. That compared with $2.4 billion in the first quarter of 2019, reflecting a fall of 67%.
Analysts had expected first-quarter underlying replacement cost profit to come in at $987 million, according to data compiled by Refinitiv.
"A good quarter but, undoubtedly, a very brutal environment," BP CEO Bernard Looney told CNBC's "Squawk Box Europe" on Tuesday.
BP's results come shortly after a historic plunge in oil prices. The May contract of U.S. West Texas Intermediate plunged below zero to trade in negative territory for the first time in history last week. Trading volume was thin given it was the day before the contract's expiration date, but the move lower was unprecedented nonetheless.
WTI futures had fetched more than $60 a barrel at the start of the year. A dramatic fall-off in demand as a result of the coronavirus outbreak has sent oil prices tumbling.
On Tuesday, the June contract of WTI traded at $11.36 per barrel, more than 11% lower for the session, while international benchmark stood at $20.22, up around 1%.
"The real situation that we have here is a fundamental situation of supply and demand," Looney said. "Demand in the second quarter, we think, will be down around 16 million barrels per day worldwide this year. And that's about five times the previous demand destruction which we saw in the global financial crisis in 2008 to 2009."
Shares of BP, which edged into positive territory during mid-morning deals, have fallen approximately 35% since the start of the year.
BP's debt rose to $51.4 billion at the end of the first quarter, $6 billion higher than the quarter before. And the firm's debt-to-capital ratio, or gearing, jumped to 36% through the first three months of the year.
The company also announced a dividend of 10.5 cents per share was announced for the quarter.
"The board of BP reviewed the dividend in the first quarter as usual and reviewed it in full and the decision was made to pay that dividend based on the underlying performance of the business in the first quarter and based on the actions we are taking," Looney told CNBC on Tuesday.
Last week, Norway's Equinor became the first oil major to cut its dividend this earnings season which had raised concerns that other oil majors may follow suit.
"There will be a sigh of relief from many retail investors that BP has committed to paying a dividend," Stuart Lamont, investment manager at Brewin Dolphin, told CNBC via email.
"There had been a great deal of debate about what the failure to do so would mean for income investors, who will now have a close eye on Royal Dutch Shell's results later this week," Lamont said.
On February 12, BP's Looney published a statement entitled "Reimagining energy, reinventing BP." It outlined the energy firm's long-term goal of becoming a net-zero company by 2050 "or sooner."
When asked whether the ongoing impact of the coronavirus crisis had altered his outlook for the business, Looney said there were three reasons to explain why he was now "even more" committed to pursuing this goal.
"Number one, I don't think this pandemic does anything but add to the challenge for oil outlooks in the future," Looney said.
"The second is I think it has reminded people in society of the frailty of our ecosystem ... People are looking at clear skies and the beauty of that and I think, while we have got different priorities right now, I think people will be very focused on that in the medium term," he continued.
"Finally, we talked about negative WTI prices last week, Lightsource BP, where we are a 50% shareholder ... is letting contracts for 400 megawatts of solar power in the United States. So, there is something about that sector that I think is providing a real attractive proposition for investors and is very resilient at times like this," Looney added.