BP’s second-quarter profit slumped by nearly two thirds from a year ago as it grappled with lower crude prices and took a huge $10.8 billion charge related to the 2010 Gulf of Mexico oil spill. <\/p>\n
In a sign it was hunkering down for an extended period of lower oil prices, the British oil and gas company also cut its planned full-year capital spending again to “below $20 billion”, after cutting it 13 per cent to $20 billion earlier this year. <\/p>\n
BP reached an $18.7 billion settlement with the US government and five states this month to resolve most claims from the oil spill five years ago, the largest corporate settlement in US history. <\/p>\n
While BP had been expected to take a $10 billion charge for this at some point, it said on Tuesday it had also agreed to pay up to $1 billion to resolve claims from local government entities, taking cumulative pretax charges for the Macondo rig explosion and spill that killed 11 workers to $55 billion. <\/p>\n
As a result, the company took a pretax charge of $10.8 billion in the second quarter, including a $9.8 billion charge related to the government settlements. <\/p>\n
Profits were also hit by a $600 million exploration write off in Libya as a result security issues, leaving underlying replacement cost profit, BP’s definition of net income, at $1.3 billion, below analysts expectations of $1.64 billion. <\/p>\n
BP also raised costs linked to restructuring following the oil price slide to $1.5 billion from the $1 billion announced in December. <\/p>\n
“The external environment remains challenging,” Chief Executive Officer Bob Dudley said in a statement. <\/p>\n
BP shares traded 1 per cent higher in London at 0830 GMT outperforming a 0.6 per cent gain for the European oil and gas sector index. <\/p>\n
“BP’s earnings were weak as second-quarter production was weaker than we had expected, but the market will take the (capital spending) cut positively,” said Anish Kapadia, analyst at investment bank Tudor, Pickering Holt and Co. <\/p>\n
REFINING BOOST <\/p>\n
In a repeat of first-quarter trends, BP’s refining and trading division, known as downstream, performed strongly while production delivered weak results amid falling oil prices. <\/p>\n
Downstream generated $1.63 billion in replacement cost profit for BP, up from $933 million a year earlier but down from an exceptionally strong $2.08 billion in the first quarter. <\/p>\n
Oil prices averaged $60 a barrel in the second quarter, up about $5 a barrel from the first quarter but down from $110 a year earlier. <\/p>\n
For the third quarter, BP said it expected “reduced refining margins and lower levels of turnaround activity”. <\/p>\n
BP’s upstream operations delivered a replacement cost profit of just $228 million versus $4.05 billion a year earlier and $372 million in the first quarter. <\/p>\n
BP’s global refining margin benchmark rose in the second quarter to $19.4 a barrel from $15.55 a year earlier and from $15.3 in the first quarter.
\nAs a rule of thumb, each $1 in refining margins equates to around $500 million in BP’s pretax replacement cost operating profit, according to the company. <\/p>\n
BP said its second-quarter results reflected the impact of continued low oil and gas prices, and a reduced contribution from its 19.75 per cent stake in Russia’s Rosneft. <\/p>\n
BP’s net cash flow significantly recovered to $6.3 billion from $1.9 billion in the first quarter. BP also sold $7.4 billion of assets as part of a $10 billion divestment programme. <\/p>\n
BP maintained its dividend at 10 cents per ordinary share. <\/p>\n
Norwegian oil major Statoil posted higher-than-forecast earnings on Tuesday and also said it was lowering its capital spending outlook for the year.<\/p>\n","protected":false},"excerpt":{"rendered":"
BP’s second-quarter profit slumped by nearly two thirds from a year ago as it grappled with lower crude prices and took a huge $10.8 billion charge related to the 2010 Gulf of Mexico oil spill. In a sign it was hunkering down for an extended period of lower oil prices, the British oil and gas company also cut its planned full-year capital spending again to “below $20 billion”, after cutting it 13 per cent to $20 billion earlier this year. BP reached an $18.7 billion settlement with the US government and five states this month to resolve most claims from […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[133],"tags":[],"class_list":["post-26060","post","type-post","status-publish","format-standard","hentry","category-oil-gas"],"acf":[],"_links":{"self":[{"href":"https:\/\/infralive.com\/web\/wp-json\/wp\/v2\/posts\/26060","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/infralive.com\/web\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/infralive.com\/web\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/infralive.com\/web\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/infralive.com\/web\/wp-json\/wp\/v2\/comments?post=26060"}],"version-history":[{"count":0,"href":"https:\/\/infralive.com\/web\/wp-json\/wp\/v2\/posts\/26060\/revisions"}],"wp:attachment":[{"href":"https:\/\/infralive.com\/web\/wp-json\/wp\/v2\/media?parent=26060"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/infralive.com\/web\/wp-json\/wp\/v2\/categories?post=26060"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/infralive.com\/web\/wp-json\/wp\/v2\/tags?post=26060"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}