LONDON (AP) — Oil giant BP reported a loss Tuesday of $4.4 billion for the fourth quarter of 2014, as oil prices plunged.
The net income figure includes a $5 billion writedown on the value of BP's inventories, after the price of Brent crude, the benchmark for North Sea oil, dropped almost 50 percent last year. BP posted a profit of $1.04 billion in the fourth quarter of 2013.
After stripping out the effect of the drop in oil prices, BP reported a loss of $969 million for the period, compared with a gain of $1.5 billion last year.
"We have now entered a new and challenging phase of low oil prices through the near and medium term," said Chief Executive Bob Dudley. "Our focus must now be on resetting BP: managing and rebalancing our capital program and cost base for the new reality of lower prices while always maintaining safe, reliable and efficient operations."
BP said it plans to cut costs by $4 billion to $6 billion this year, reducing exploration expenditures and postponing some projects.
The company is already in the process of downsizing and simplifying its operations, with $5 billion of divestments projected for this year.
BP took a charge of $477 million in the fourth quarter for the 2010 Gulf of Mexico oil spill, bringing total charges for the disaster to $43.5 billion.
Replacement cost profit from Russian oil company Rosneft, in which BP owns a stake, fell 57 percent to $451 million compared with $1.1 billion in the fourth quarter of 2013.