Profits halved at oil giant

BP ‘has learned from Deepwater accident’ says Dudley

Bob DudleyBP said it had “finally drawn a line” under its liabilities for the Gulf of Mexico oil spill and is now a stronger company after learning lessons from the accident.

The company said it had taken a further $2.8 billion charge in the second quarter in relation to the disaster in 2010.

It said weak refining margins and oil prices led to profit falling by half for the second quarter, forcing it to cut to its investment plans for the remainder of the year.

Its underlying replacement cost profit, the company’s definition of net income, fell from $1.3 billion in the same quarter last year to $720 million this time (44%), $120 million below expectations.

Refining margins were the weakest for a second quarter in six years, the company said.

Capital expenditure for this year will come in below the $17 billion target it had previously stated.

Bob Dudley, BP group chief executive said: “We are very pleased to have finally drawn a line under the material liabilities for Deepwater Horizon.

“We will always be mindful of what we have learned from that tragic accident. BP today is a stronger, more focused and more disciplined company. We continue to actively develop a strong, balanced portfolio and we are managing the business for value over volume. Our relentless group-wide focus on capital and cost discipline is helping BP to become much more efficient while maintaining the investment needed for future growth.

“As we look forward we expect the external environment to remain challenging, but we have a strong pipeline of new projects which will add 500,000 barrels of oil equivalent a day of new production capacity by the end of next year. Beyond this lie further opportunities, including a number which we expect to deliver through innovative structures such as the recently announced Aker BP venture.

“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’s update comes as oil prices have fallen to a three-month low, hit by rising concerns that a global oversupply of both crude and natural gas will dampen prices.

US oil fell 2.4% to $43.11 a barrel, its lowest level since April, meaning it has now fallen by 12% this month.

Brent crude dropped 2.1% to $44.75, its lowest level since 10 May.



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