Canadian Manufacturing

BP reports US$6.3B loss as Deepwater Horizon settlement hits books

Gulf oil spill has now incurred $54.6B in cumulative costs on oil giant



LONDON—BP reported its 2015 second-quarter results July 28, revealing a US$6.3 billion loss, largely due to its Deepwater Horizon settlement.

BP previously announced that it had reached agreements in principle to settle all outstanding federal and state claims and claims made by more than 400 local government entities arising from the 2010 Deepwater Horizon oil spill, which incurred an additional non-operating pre-tax charge of $9.8 billion.

Over the quarter, BP took a charge of $10.8 billion in total costs related to the Gulf of Mexico oil spill – with charges for further business economic loss claims and other ongoing costs adding to the tally. The total cumulative pre-tax charge for the incident now sits at $54.6 billion.

Aside from the settlement charge, BP reported underlying replacement cost profit for the quarter at $1.3 billion, compared with $2.6 billion for the previous quarter and $3.6 billion for the second quarter of 2014. The company said the lower results reflect the impact of continued low oil and gas prices, a reduced contribution from Rosneft, and one-off charges arising from circumstances in Libya, but also continuing strong earnings from BP’s downstream businesses and lower cash costs throughout the Group.

“The external environment remains challenging, but BP moved quickly in response and we continue to do so,” Bob Dudley, BP’s Group CEO, said. “Our work to increase efficiency and reduce costs is embedding sustainable benefits throughout the Group and we continue with capital discipline and divestments.”

The company noted the second quarter Brent crude price averaged $62 a barrel, compared with $54 a barrel in the first quarter and $110 a barrel in the second-quarter of 2014. In the third-quarter to date, the price has averaged $58 a barrel.

“In the past few weeks oil prices have fallen back in response to continued oversupply and market weakness and the recent agreements regarding Iran. 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,” Dudley said.

BP also announced a quarterly dividend of 10 cents per ordinary share, expected to be paid in September.

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