BP has slashed the valuation of its North Sea portfolio by around $440 million (£355m) and plunged deep into the red amid the crude price plunge triggered by the coronavirus.

The oil giant posted a bottom line loss of $4.4 billion for the first quarter after making a $3bn profit in the same period last year.

Chief executive Bernard Looney said the company is facing unprecedented challenges amid the “brutal” market conditions resulting from the spread of the coronavirus.

Warning: North Sea at breaking point as oil price turns negative in US

The Brent crude price fell to below $20 per barrel last week for the first time in 18 years following the dramatic drop in demand caused by the pandemic.

BP said yesterday there remains an exceptional level of uncertainty regarding the near-term outlook for prices and product demand, particularly while many economies remain under lockdown.

However, Mr Looney is confident that BP will be able to cope with the resulting challenges. He said it is focused on controlling the things that it can control.

BP announced a first quarter dividend of 10.5 cents per share, up from 10.25 cents.

The costs of the crude price plunge must be shared fairly

The response will involve slashing investment in new assets by $4 billion. BP has also launched a drive to cut its running costs by $2.5 billion annually by the end of 2021.

Job cuts are in prospect across its global operations later this year.

BP has not said how the cost cutting will affect its North Sea operations.

However, yesterday’s results announcement included indications that the fall in oil prices this year has impacted significantly on them.

BP disclosed that it had cut the valuation of its exploration and production assets outside the US by $439m. It noted the associated impairment charges reflected oil price impacts in the UK North Sea.

The disclosure will be regarded with concern in the wider North Sea oil and gas industry, as firms across the supply chain face the prospect of a deep downturn.

Oil & Gas UK has said the oil price fall this year has left the industry at breaking point. The trade body warned on Monday that up to 30,000 jobs could be lost in the North Sea as firms cut spending in the area in response. Many are still grappling with the fallout from the slump in oil prices between 2014 and 2016.

30,000 North Sea jobs at risk amid oil price plunge

BP retrenched in the North Sea amid the resulting slump. The company cut hundreds of jobs and sold a range of assets that it decided were non-core

It has focused investment on big North Sea fields from which it can produce oil and gas relatively cheaply. These include bumper developments West of Shetland such as Clair Ridge.

In February BP started production from the Alligin field West of Shetland, which it said formed part of its “advantaged oil” strategy.

The head of BP’s North Sea business, Ariel Flores, has held out the prospect BP could develop other fields by linking them to facilities it has installed West of Shetland.

BP said yesterday it only expects to spend $12bn developing new assets around the world this year, compared with $16bn in February.

Mr Looney said the company would continue to invest in areas such as renewable energy. Recent oil and gas market developments have only reinforced the BP leadership team’s belief in the importance of supporting the energy transition.

After succeeding Bob Dudley as chief executive, in February, Mr Looney said BP aimed to be a net zero company by 2050.

New BP boss insists oil giant can be force for good as it aims for net zero

BP made $791m profit in the first quarter on the underlying replacement cost figure against $2.35bn last time. Analysts expected it to make around $710m profit on the measure, which strips out the effect of changes in the value of oil and gas inventories and one-offs.

Mr Looney told the FT that there would be jobs cuts globally at BP towards the end of this year. He is restructuring operations in support of the net zero ambition.

Earlier in April Mr Looney said no BP employees would be laid off as a result of virus-related cost cutting for the following three months.

Shares in BP closed up 8.1p at 322.1p.

Brent crude traded at $19.93/bbl yesterday afternoon, down six cents on the day. It sold for around $70/bbl in January.

BP cut the valuation of US exploration and production assets by $632m in the first quarter.