LONDON: BP plunged into a quarterly net loss of almost $16.85 billion as the coronavirus pandemic ravaged oil demand and prices, triggering huge asset writedowns, the British energy giant announced Tuesday. The company responded by cutting its dividend for the first time since the Deepwater Horizon oil rig disaster in 2010 that damaged BP's finances and reputation.
"The ongoing severe impacts of the Covid-19 pandemic continue to create a volatile and challenging trading environment," BP said in Tuesday's earnings statement. "Looking ahead, the outlook for commodity prices and product demand remains challenging and uncertain," it added.
The quarterly loss after tax of nearly $16.85 billion compared with net profit of $1.82 billion in the second quarter of 2019, BP said. "In particular, our reset of long-term (oil) price assumptions and the related impairment and exploration write-off charges had a major impact" this time around, said chief executive Bernard Looney. Looking to save cash, the group announced a quarterly dividend of 5.25 US cents per share, down from 10.5 cents in the first quarter.
Nevertheless BP's share price surged 7.5 percent in London midday deals. In the immediate future, BP will focus on rebuilding its finances and Looney has already decided to axe around 10,000 jobs, or 15 percent of its global workforce owing to the coronavirus fallout on energy demand and prices.
After companies worldwide closed their doors and airlines grounded planes at the height of the Covid-19 outbreak towards the end of the first quarter, oil prices dropped off a cliff, even briefly turning negative. BP recently announced the sale of its petrochemical business to privately-owned rival Ineos for $5.0 billion.
Alongside its results, BP set out details on how it expects to achieve "net zero" carbon emissions for the company by 2050. Switching from an international oil company to an "integrated energy company", BP said that over the next decade its oil and gas production is expected to fall by at least one million barrels of oil equivalent a day, or 40 percent when compared with 2019 levels.
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