The company said its underlying replacement cost profit, defined as its net income, was $1.3 billion, falling short of estimates for $1.64 billion and behind the $3.6 billion it reported past year. “I am confident that positioning BP for a period of weaker prices is the right course to take, and will serve the company well for the future”, said Chief Executive Bob Dudley, referring to the nuclear agreement between and the West.
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BP reported a so-called replacement-cost loss – which takes into account changes in the oil price – of $6.3 billion for the second quarter.
The sharp decline includes a $9.8 billion pretax charge that BP recorded as part of an $18.7 billion agreement with the U.S. government and five states to settle legal claims relating to its Deepwater Horizon fatal oil spill in the Gulf of Mexico.
The company has also lowered its expected full-year organic capital spending to below $20bn after cutting it by 13pc earlier this year as the industry continues to grapple with low oil prices.
Oil prices averaged $60 a barrel in the second quarter, up about $5 a barrel from the first quarter but down from $110 a year earlier.
The result reflected the impact of continued low oil and gas prices, a reduced contribution from BP’s stake in Russian group Rosneft, and one-off charges arising from circumstances in Libya, but also continuing strong earnings from BP’s downstream businesses and lower cash costs group-wide.
BP set the blame squarely on lower oil and gas prices.
As a rule of thumb, each $1 in refining margins equates to around $500 million in BP’s pretax replacement cost operating profit, according to the company.
BP maintained its dividend at 10 cents per ordinary share.
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.
Capital expenditure was also cut to $4.7bn in the second quarter, down from 5.4bn in the same period a year ago.
Despite the tough environment created by low oil prices, BP did receive some support over the last quarter from its refining arm.
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In 2013, BP said it planned to generate USD10.00 billion from divesting from some of its assets before the end of 2015.
