Oil giant shifts focus
BP reinvents itself as dividend cut following loss
BP aims to reduce oil reliance
Oil giant BP unveiled plans to reinvent itself as an integrated energy company as it reported a loss and cut its dividend for the first time in a decade.
The company reported a record $6.7 billion loss in the second quarter as the coronavirus crisis caused a slump in demand for energy.
The net loss, which was in line with analysts’ expectations, was largely a result of BP’s decision to wipe $6.5 billion off the value of oil and gas exploration assets.
The dividend will be reset to a ‘resilient’ level of 5.25 cents per share per quarter, and intends it to remain fixed at this level, subject to the board’s decision each quarter.
It will be supplemented by a commitment to return at least 60% of surplus cash to shareholders through share buybacks, once BP’s balance sheet has been deleveraged and subject to maintaining a strong investment grade credit rating.
BP’s oil and gas production is expected to reduce over 10 years by at least one million barrels of oil a day, or 40%, from 2019 levels as it aims to cut emissions from oil and gas by between 30% and 40%.
Within 10 years, BP aims to have increased its annual low carbon investment 10-fold to around $5 billion a year, building out an integrated portfolio of low carbon technologies
Bernard Looney, chief executive, said: “BP has been an international oil company for over a century – defined by two core commodities produced by two core businesses. Now we are pivoting to become an integrated energy company.
“In the years ahead, BP is going to significantly scale-up our low-carbon energy business and transform our mobility and convenience offers. We will focus, and reduce, our oil, gas and refining portfolio.”