BP's financial results are in line with the trends of the past few quarters, with full year profits halving in 2015 as crude oil prices plunged by almost 50% from 2014. Like other majors, BP managed to offset losses in its upstream business with stronger performance in downstream, in part thanks to high refining margins.
On the operational front, BP's announcement is an indication of the increasingly difficult environment for crude producers. BP managed to increase oil production by 11% year on year in 2015, as new projects in Europe and the rest of the world more than offset a drop in output in the US. However, BP's share of liquids production in Rosneft, Russia's largest oil firm, fell marginally. Capital expenditure fell by one-fifth and only a handful of new projects were approved.
More pain can be expected this year: oil prices lurched downwards again this quarter, refining margins are falling and BP expects to further cut back on capital expenditure. All of this points to reduced production volumes and shrinking revenue.