NORTH Sea Budget tax changes could boost BP's earnings by hundreds of millions of dollars in coming years as the company prepares for a long period of low oil prices.

The oil and Gas giant recorded a 40 per cent fall in first-quarter profits, to $2.6 billion (£1.7bn) net of one-offs, down from $3.2bn in the same period last year, reflecting the plunge in the oil price since June to a six year low.

The oil price fall has prompted BP to slash spending and encouraged talk that the company could attract a takeover bid.

Chief executive Bob Dudley said "We are resetting and rebalancing BP to meet the challenges of a possible period of sustained lower prices."

BP announced plans to cut 300 jobs in the North Sea in January.

However, the first quarter profit was much higher than the $1.3bn expected by analysts.

Kim Fustier, analyst at Edison Investment Research, said the out-performance was largely thanks to one off tax changes noting that BP booked the benefit of cuts in North Sea rates included in The Budget during the quarter.

The company said the changes meant it recorded a negative tax rate of 21 per cent on applicable profits, compared with a positive rate of 33 per cent for the first quarter of 2014.

It did not disclose details. Given the profits made by BP, the statement implies the tax changes will be worth hundreds of millions of dollars over time. The benefits will be felt over the period that the revised rates remain in force, rather than immediately.

On Monday Centrica, which owns Scottish Gas, said the tax changes were positive for its oil and gas business but would have little impact this year.

BP's comments will boost hopes the tax changes will provide a long term boost to activity in the North Sea.

Last week Mr Dudley said the high cost North Sea faced a painful adjustment to the oil price fall, which would lead to massive restructuring in the area.

However, the first quarter results announcement did not refer to any further North Sea asset sales or changes in the value of the company's portfolio in the area.

In the final quarter of 2014 BP wrote down the value of its North Sea portfolio by $5bn to reflect the fall in the crude price.

BP is focusing investment on a relatively narrow range of big projects. These include the giant new Clair Ridge development West of Shetland, where BP is also revamping the Schiehallion asset.

The company last week announced the sale of its stake in the CATS pipeline system in the North Sea for £324m.

BP said this took the total value of divestments to $7.1bn under a plan to offload $10bn by the end of the current year, announced in 2013.

The company has cut its budget for spending on new projects around the world by 13 per cent, to $20bn, this year.

BP's exploration and production arm made an underlying pre-tax replacement cost profit of $0.6 billion for the first quarter of 2015 compared with $4.4 billion for 1Q 2014.

The company got an average $54 per barrel for Brent crude in the first three months, the lowest quarterly average since the start of 2009. It received $108 per barrel in the first quarter of 2014.

The downstream refining and marketing division doubled profits to $2.2bn. Low oil prices have boosted the profitability of refining businesses.

BP recorded a further $330m charges in the quarter in respect of the disastrous spill on its acreage in the Gulf of Mexico in 2010, taking the total cost to date to $43.8bn.

The company will pay a first quarter dividend of 10 cents per share, in line with the fourth quarter of 2014.

Shares in BP closed down 0.8p at 476.1p.