Oil giant BP reported a 96% drop in third-quarter profit on Tuesday and announced further efforts to curtail spending, as it prepares for a prolonged period of low oil prices.
The London-based company said net income fell to $46 million from $1.29 billion in the third quarter of 2014. So-called underlying replacement cost profit, BP's preferred measure of performance, fell 40% to $1.82 billion, AP reported.
BP also said it plans to cut costs by $6 billion through 2017—$3 billion more than already achieved—forecasting oil prices at around $60 a barrel by that time. Brent crude, the benchmark for North Sea oil, averaged $50.26 a barrel in the third quarter, down 51% from a year earlier. The company also expects to sell as much as $5 billion of assets next year.
"BP has successfully adapted to changing circumstances many times in its history and, in a hard time for the entire industry, I believe we will once again successfully take on today's challenges," the company's CEO Bob Dudley said in a statement.
Oil prices dropped to a six-year low in August and have not rebounded much. That is prompting oil companies to cut production, with the International Energy Agency forecasting declines in the United States, North Sea and Russia next year.
Dudley said the cost savings announced on Tuesday underpin "our strong priority of sustaining our dividend and then growing free cash flow and shareholder distributions over the long term."
Some analysts believe BP's cost-cutting efforts are beginning to pay off. Three of 12 analysts tracked by Hargreaves Lansdown, a London-based stockbroker, upgraded their recommendations on the company last month.
BP took a further charge for $426 million for costs related to the Deepwater Horizon spill, pushing total charges to $55 billion.
