BP also announced that it had halved its dividend to 5.25 cents per share for the quarter, from 10.5 cents per share for the first three months of the year.
The loss reported for the quarter was $ 16.8 billion, which includes an after-tax charge of $ 10.9 billion for non-operating items. This compares to a loss of $ 4.4 billion in the first three months of 2020.
The breakdown of that figure included $ 9.2 billion in write-downs across the group, largely due to BP’s revised forecast for oil and gas prices over the next 30 years, and 1.7 billion dollars in exploration write-offs.
The UK-based oil and gas company said last month it could incur non-cash impairment charges and write-offs in the second quarter, estimating a total range of $ 13 billion to $ 17.5 billion after tax. At the time, BP said the “lasting” impact of the coronavirus pandemic prompted the company to lower its oil and price forecasts until 2050.
“These flagship results were driven by another very difficult quarter, but also by the deliberate steps we have taken as we continue to reinvent energy and reinvent bp,” said Bernard Looney, CEO of BP on Tuesday.
“In particular, our reset of long-term pricing assumptions and exploration-related depreciation and write-off costs had a major impact. Below these, however, our performance remained resilient, with good cash flow and, most importantly, secure and reliable operations. , ” he added.
BP shares are down more than 40% year-to-date.
‘BP woke up’
International benchmark Brent futures traded at $ 44.02 a barrel Tuesday morning, down more than 0.3%, while West Texas Intermediate (WTI) crude futures traded set at $ 40.89, or about 0.3% less.
Analysts had anticipated that “Big Oil” companies, referring to the world’s biggest energy majors, would be likely to report “horrific” results in the second quarter, as coronavirus lockdown measures coincided with an unprecedented demand shock and significantly lower oil and gas prices.
However, some companies were able to contain the damage as their business divisions took advantage of the increased volatility in the markets.
Along with BP’s second quarter results, the energy giant announced a new strategy that it says will help the company make the transition to clean energy, in line with its plans to become a net carbon company. by 2050 or earlier.
The company said that within 10 years it plans to increase its annual low-carbon investment tenfold to around $ 5 billion per year. It also aims to develop around 50 gigawatts of net renewable energy generation capacity by 2030, a 20-fold increase from 2019.
“We believe that what we are offering today offers a compelling and attractive long-term proposition for all investors – a resilient and resilient dividend with a share buyback commitment; profitable growth; and the opportunity to invest in the energy transition, ”BP’s Looney said in a press release.
“I want to recognize the impact that the reset dividend will have on a lot of people – whether they are retail investors or large carriers,” Looney said. “However, it is a decision that we wholeheartedly believe in the long-term best interests of our stakeholders. ”
BP also pledged to reduce oil and gas production by 40% from current levels by the end of the decade “through active portfolio management” and said it “would not start any exploration in new countries ”.
Responding to announcements of BP’s new strategy, Mel Evans, Greenpeace UK’s senior climate activist, said: “BP has realized the immediate need to reduce carbon emissions this decade. ”
“Reducing oil and gas production and investing in renewable energy is what Shell and the rest of the oil industry need to do to give the world a chance to meet our global climate goals,” Evans continued. . “BP must go further and must account or abandon its stake in the Russian oil company Rosneft. But it is a necessary and encouraging start. ”
Shell was not immediately available for comment when contacted by CNBC on Tuesday.