LONDON—BP PLC on Tuesday swung to a loss in the second quarter,
as earnings were hit by lower oil prices and a multibillion-dollar
charge relating to the deal it reached earlier this month to settle
U.S. federal and state claims over the 2010 Deepwater Horizon
disaster.
London-based BP said its replacement cost loss—a number
analogous to the net income that U.S. oil companies report—was
$6.27 billion, compared with a profit of $3.18 billion a year
earlier.
The sharp decline reflects a $10 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
fatal oil spill in the Gulf of Mexico. The earnings also reflect a
quarter in which oil prices rebounded off lows hit in January, but
remained well below year-ago levels.
The slide in oil prices creates a challenging environment for BP
as it prepares to finally move on from the Deepwater Horizon
disaster. The last five years have taken their toll on the company,
which sold off more than $40 billion in assets to raise cash for
cleanup and legal costs. While the settlement will give the company
more room to maneuver, the weak oil price will keep the pressure
on.
The company has already announced plans to cut spending in
response to lower prices and organic capital expenditure fell to
$4.5 billion in the second quarter. Organic capital expenditure for
the whole year is now expected to be below $20 billion.
"The external environment remains challenging, but BP moved
quickly in response and we continue to do," said CEO Bob Dudley. "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."
Write to Sarah Kent at sarah.kent@wsj.com
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