BP payout falls after huge loss

BP has slashed its dividend payout for the first time since the Deepwater Horizon disaster, after the company’s profits were squeezed by a drop in the price of oil.

Investors will now receive 5.25 US cents (4p) per share, compared with 10.25 cents (7.8p) earlier.

It comes after the oil giant swung to a $6.7billion (£5.1billion) underlying replacement cost loss in the second quarter of the year.

It is a massive hit com- pared with the same time last year, when it made a $2.8billion (£2.1billion) underlying replacement cost profit, but is still about $100million (£76million) more than analysts had expected.

The average price of oil was about 57 per cent lower at $29.50 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 $13billion to $17.5billion (£9.9billion to £13.4billion) after tax. 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 – some very safe and reliable operations.”

Three months ago, amid the doom and gloom of Covid-19, BP surprised many market-watchers by not cutting its payout to shareholders, as its rival Shell had for the first time since the Second World War.

Separately from the results, Mr Looney provided more detail to investors on the company’s new green plans.

By the end of the decade he pledged that BP will be investing about $5billion (£3.8billion) in low-carbon projects, a 10-fold increase from today.

‘Performance has remained resilient, with good cash flow’