Oil giant BP has made a record quarterly loss, slashing its dividend payout for the first time since the Deepwater Horizon disaster as the company’s profits are squeezed by the plummeting price of oil.
Investors will now receive 5.25 US cents per share – the equivalent of 4p – compared with the 10.25 cents they had been receiving.
The shift comes after BP recorded a £5.1 billion underlying replacement cost loss in the second quarter of the year – a massive hit compared with last year, when it made a £2.1 billion cost profit.
The average price of oil was around 57 per cent lower at 29.50 US dollars for a barrel of Brent crude in the quarter compared with the same three months in 2019.
The falling price was driven by a mix of geopolitics as Saudi Arabia and Russia started a price war at the start of the year, and the coronavirus pandemic, which pushed down demand for oil.
It was in part this decrease that two months ago sparked an announcement that BP would write off around £9.9 billion to £13.4 billion after tax. BP has already announced it will cut 10,000 jobs, with as many as 2,000 set to be lost in the UK.
Cutting carbon emissions
Alongside its results, the company also unveiled details of its strategy to slash carbon emissions, revealing that it aims to cut oil and gas production by 40 per cent and increase low-carbon tenfold to £5 billion by 2030.
The pledge was welcomed by environmentalists. Mel Evans, senior climate campaigner for Greenpeace UK, said: “BP has woken up to the immediate need to cut carbon emissions this decade.
“Slashing oil and gas production and investing in renewable energy is what Shell and the rest of the oil industry needs to do for the world to stand a chance of meeting our global climate targets.
“BP must go further, and needs to account for or ditch its share in Russian oil company, Rosneft. But this is a necessary and encouraging start.”
‘Very challenging quarter’
BP chief executive Bernard Looney said: “These headline results have been driven by another very challenging quarter, but also by the deliberate steps we have taken as we continue to reimagine energy and reinvent BP.
“In particular, our reset of long-term price assumptions and the related impairment and exploration write-off charges had a major impact.
“Beneath these, however, our performance remained resilient, with good cash flow and – most importantly – safe and reliable operations.”
While the dividend will remain at 5.25 US cents until the board decides to increase it, Mr Looney and his fellow directors promised to return money to investors by buying back their shares with at least 60% of BP’s surplus cash.