The British energy giant BP Plc reported a sharp drop in net profit for the first quarter, citing the continuing price slump in oil markets amid mounting fears of a coronavirus crisis and scarce crude oil storage capacity.

BP posted a profit of 800 million USD, down by 6.7% from 2.4 billion USD a year earlier.

Analysts expected first-quarter profit to reach 987 million USD.

“A good quarter, but undoubtedly, a very brutal situation”, said the CEO of BP Plc, Bernard Looney.

BP’s performance was preceded by a historic price slump in the oil markets. Last week, the May futures of West Texas Intermediate, US light crude oil, fell below zero, trading in negative territory for the first time in history. Trade volume was low as it was taking place on the day before the contract expiration date, but nonetheless, movement in negative territory was unprecedented.

BP’s debt to equity ratio is at 36.2%, remaining above the target range of 20% to 30% for the sixth consecutive quarter. Drawing attention to the weak outlook for the second quarter, BP said they expect the company to make an annual payment of about 1.2 billion USD related to the Gulf of Mexico oil spill. This would put even more pressure on the company’s balance sheet.

By the end of the third quarter, BP had 32 billion USD in liquidity, including credit lines and bond sales.

The company said on Monday (April 27) that BP will provide 15 billion USD in sales that are critical to alleviating the company’s debt burden, but the timing of their receipt will depend on the negotiation period with Hilcorp Energy Co, which aims to buy BP’s assets in Alaska.

The company will continue to pay dividends, raising them to 10.5 cents a share in the previous quarter. The generous dividends of Big Oil Group companies are a big attraction for investors, but the sustainability of payouts is at risk because of the oil market crisis.

The dramatic decline in oil demand and its derivatives as a result of the coronavirus outbreak has led to a sharp fall in oil prices.

BP shares have lost approximately 35% of their value since the beginning of the year.