BP cuts dividend after record loss

New boss plots green revolution at oil major

BP chopped its prized dividend in half after a record quarterly loss of £13.5bn.

The energy giant was hammered by a sharp drop in oil prices, triggered by the pandemic.

It is the first time BP has cut its payout to shareholders since the Deepwater Horizon disaster a decade ago.

The move deals another devastating blow to UK pension funds and savers, which rely on BP’s regular payouts for extra income. The company will hand investors £850m for the period between April and June.

This works out at about 4p per share, down from £1.7bn between January and March when it paid 8.1p.

But shares jumped 6.5pc, or 18.2p, to 299.25p after chief executive Bernard Looney ( pictured) unveiled some details of its new green strategy.

Analysts had predicted that BP would axe its dividend after a hellish period that Looney has described as the ‘toughest quarter in the industry’s history’.

Measures to contain the spread of the coronavirus across the world led to transport and work restrictions that grounded planes, took cars off the road and closed factories for months.

This meant demand for oil fell even though lots was still being produced and drove down the price of Brent crude as low as $19 a barrel, compared with almost $70 at the start of the year.

BP has now had to cut its longterm oil price forecasts and write off the value of some exploration assets, admitting that these might never be developed. It took the firm’s impairment and writedown charges to £13.4bn in the second quarter.

Its share price has plunged by around 37pc this year and it is axing 10,000 staff from its global workforce of 70,000.

The company thinks demand for oil could fall by 9m barrels a day – or about 9pc of pre-coronavirus oil consumption, which was about 100m barrels a day.

BP had been on track to pay out almost £7bn to shareholders this year – and had become the largest dividend payer on the FTSE 100 after rival Royal Dutch Shell knocked two-thirds off its payout. But BP’s dividend will total around £4.3bn after it has pledged to pay the 4p per share rate for the foreseeable future.

Looney, who took over from long-running boss Bob Dudley in February this year, said the top priority for cash will be funding the dividend.

Next, it will be paying down debt – and then investing in becoming a green energy group.

If there is any spare cash left, it will hand back about 60pc of this to shareholders by buying back shares, once the net debt is below £27bn.

BP plans to pivot from being a traditional oil and gas group to an ‘integrated energy company’. Looney unveiled plans to invest in renewables, bioenergy and carbon storage technology.

It wants to increase its investment in low- carbon technology tenfold, to around £3.8bn a year by 2030, and cut its oil and gas output by at least 40pc.

Environmental campaigners Greenpeace said BP had ‘woken up to the immediate need to cut carbon emissions this decade’.

Looney said: ‘This coming decade is critical for the world in the fight against climate change, and to drive the necessary change in global energy systems will require action from everyone.’

He will give a more detailed ‘roadmap’ for the transition in mid-September.