Oil giant BP has reported a near 50% fall in third-quarter profits from last year as the sector continues to struggle with low prices.
The company made US$933m on an underlying replacement cost basis, compared with US$1.8bn a year earlier.
BP blamed falling oil prices for its fall, saying it was affected by a “weaker price and margin environment”.
Rival oil company Royal Dutch Shell also warned over oil prices, although its profits rose by 18% from last year.
The company reported better-than-expected third-quarter profits of US$2.8bn.
BP’s chief financial officer Brian Gilvary said: “We continue to make good progress in adapting to the challenging price and margin environment.
“We remain on track to rebalance organic cash flows next year at US$50 to US$55 a barrel, underpinned by continued strong operating reliability and momentum in resetting costs and capital spending.
“At the same time, we are investing in the projects, businesses and options to deliver growth in the years ahead.”
BP also cut its investment plans for this year. It now expects to spend US$16bn on capital expenditure this year, compared with a previous prediction of US$17-19bn. For 2017, it is forecasting investment of US$15-17bn.
Shell chief executive Ben van Beurden said: “Shell delivered better results this quarter, reflecting strong operational and cost performance,” he said. “But lower oil prices continue to be a significant challenge across the business and the outlook remains uncertain.
Earlier this year, Shell completed its purchase of BG Group for $50bn. It is now aiming to cut costs and sell $30bn of assets in order to reduce debts.
Last week, Shell said it had sold Canadian oil and gas assets for US$1bn as part of its asset-sale programme.
“Our investment plans and portfolio actions are focused firmly on reshaping Shell into a world-class investment case at all points in the oil-price cycle,” said Mr van Beurden.
“We are making good progress towards this aim in spite of current challenging market conditions.”
Shares in Shell rose by about 3% in early morning trading as investors welcomed the results.
Nicholas Hyett, equity analyst at Hargreaves Lansdown, said: “Despite the respite provided by an improved oil price, conditions remain tough in the oil and gas sector.
“Nonetheless, the return to profit in the upstream division is symbolically important as the group heaves itself out of the well it found itself in after the oil price collapsed.
“Unless the oil price stages a miraculous recovery, there’s a long way to go before Shell returns to rude health; nonetheless the group is making progress in climbing the oil pole.”
David Hunter, an energy analyst at Schneider Electric, told BBC Radio 4’s Today programme that he believed the two companies were banking on a recovery in oil prices to boost their future profits.
“They’re a big contributor in FTSE 100 dividend payouts and have continued to maintain those levels despite the fall in oil prices,” he said.
“The long-term bet is in the oil price recovering to maintain their ability to pay these dividends.
“There has been generally some momentum building in the oil price relatively recently. Obviously in January it bottomed out at US$27 and it’s now flirting with the $50 mark – a little bit above and below in recent weeks – so that’s a recovery of sorts.”
The oil price peaked at about US$115 a barrel in the summer of 2014, but then fell sharply due to a combination of increased supply and slowing demand.
Last month, news that the Opec oil producers’ cartel had agreed a limit on production sent the oil price to its highest in a year. However, doubts over whether the group will be able to deliver production cuts have seen crude prices slip recently. (BBC)