Profits at oil giant BP plunged 44% to US$720m in the second quarter.
The slump in underlying replacement cost profit, the benchmark industry measure, comes as the sector battles low oil prices.
BP boss Bob Dudley said: "Compared with a year earlier, the underlying second-quarter result was impacted by lower oil and gas prices and significantly lower refining margins, but this was partly offset by the benefit of lower cash costs throughout the group as well as lower exploration write-offs."
Oil prices fell to a three-month low on Monday amid concerns of a global oversupply of crude and natural gas. Brent crude was down 2.1% at $44.75.
Mr Dudley added: "We are delivering significant improvements to the business that will stick at any oil price. We are now well down the path of transforming our business to compete, whatever the future holds.
"We now see a much stronger outlook for BP and are focused on growth, both for this decade and beyond."
BP also booked a US$5.2bn charge linked to costs associated with the Deepwater Horizon oil spill.
The total cost of the 2010 disaster in the Gulf of Mexico now stands at around $61.6bn, with BP saying it has drawn a line under the payouts.
Shares slumped 3% in trading on Tuesday morning.
The group has also been slashing costs and axing jobs, cutting around 10% of its workforce to offset tough trading.
Brian Gilvary, BP's chief financial officer, said: "We continue to reset our capital and cost base and are moving steadily towards our aim of rebalancing organic sources and uses of cash by 2017 in a 50-55 US dollars per barrel oil price range."
On a non-underlying basis, losses for the second quarter narrowed to $2.2bn from $6.2bn in the same quarter last year.
For the first half of the year, underlying profits came in at $1.2bn compared with $3.8bn last year.
Nicholas Hyett, equity analyst at Hargreaves Lansdown, said: "It looks like BP is betting on a speedy return to higher oil prices.
"If that appears, then BP will have protected its shareholders through the tough times.
"But if oil does not rebound, then BP will become progressively weaker in an environment where strength matters.
"If prices do recover, BP's lower cost base will serve it very well, and profits ought to recover rapidly, but for now, cost cutting is simply serving to limit the damage."