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| BP reveals $6.3bn quarterly loss due to Deepwater Horizon bill | BP reveals $6.3bn quarterly loss due to Deepwater Horizon bill |
| (35 minutes later) | |
| BP has revealed a loss of $6.3bn (£4bn) for the second quarter after being forced to book new costs linked to the Deepwater Horizon disaster. | BP has revealed a loss of $6.3bn (£4bn) for the second quarter after being forced to book new costs linked to the Deepwater Horizon disaster. |
| The UK oil company slid into the red after taking an extra $10.8bn charge related to the Gulf of Mexico oil spill in 2010. | |
| The provision follows the $18.7bn legal settlement reached by BP earlier this month to cover US federal, state and local claims. | The provision follows the $18.7bn legal settlement reached by BP earlier this month to cover US federal, state and local claims. |
| The Deepwater Horizon bill led to BP recording a replacement cost loss – the benchmark measure for the oil industry – of $6.3bn for the quarter and $4.2bn for the first half of 2015. This compares witha profit of $6.7bn in the first half of last year. | The Deepwater Horizon bill led to BP recording a replacement cost loss – the benchmark measure for the oil industry – of $6.3bn for the quarter and $4.2bn for the first half of 2015. This compares witha profit of $6.7bn in the first half of last year. |
| Related: BP set to pay largest environmental fine in US history for Gulf oil spill | Related: BP set to pay largest environmental fine in US history for Gulf oil spill |
| Stripping out the Deepwater Horizon costs and other one-off items, BP said that underlying replacement cost-profit fell 64% year-on-year in the second quarter to $1.3bn. This was worse than the $1.6bn expected by City analysts. | Stripping out the Deepwater Horizon costs and other one-off items, BP said that underlying replacement cost-profit fell 64% year-on-year in the second quarter to $1.3bn. This was worse than the $1.6bn expected by City analysts. |
| Energy groups are under pressure after a slump in the oil price, which has forced the sector to make thousands of job cuts around the world. Brent crude traded at an average of $59 a barrel in the second quarter of the year, almost half its value of a year earlier. | |
| As a consequence, BP cut capital expenditure to $4.7bn in the second quarter compared with $5.6bn in the same period last year. The company also revealed it now expects restructuring costs to hit $1.5bn in 2015, compared with initial expectations of $1bn. | As a consequence, BP cut capital expenditure to $4.7bn in the second quarter compared with $5.6bn in the same period last year. The company also revealed it now expects restructuring costs to hit $1.5bn in 2015, compared with initial expectations of $1bn. |
| Bob Dudley, the BP chief executive, indicated the company’s move to cut exploration spending and sell off $10bn of assets this year should help insulate it from the oil price fall. The assets sell-off is on top of the $38bn-worth that BP sold in response to the Gulf disaster. | |
| Dudley said: “The external environment remains challenging, but BP moved quickly in response and we continue to do so. Our work to increase efficiency and reduce costs is embedding sustainable benefits throughout the group and we continue with capital discipline and divestments.” | |
| Royal Dutch Shell, BP’s oil rival, and Centrica, the owner of British Gas, are also expected to warn about the squeeze on the industry when they report figures this week. | Royal Dutch Shell, BP’s oil rival, and Centrica, the owner of British Gas, are also expected to warn about the squeeze on the industry when they report figures this week. |