BP PLC said its net loss, which was bigger than the market consensus, compared with a net profit of $5.7 billion a year earlier. Revenue was down 9 per cent at $95 billion. The company also made an additional provision of $847 million for the Gulf of Mexico oil rig disaster and cleanup, taking the total provision to just over $38 billion.
Underlying replacement cost profit for the period was $3.7 billion, down from $5.7 billion a year earlier. The figure excludes non-operating items and accounting effects.
BP said non-operating charges totalled $4.8 billion and mainly related to a lower value assigned to U.S. shale gas assets and some refineries, as well as the decision to suspend the $1.5 billion offshore Liberty project in Alaska.
"The underlying results were depressed by weaker oil and U.S. gas prices together with reductions in output due to extensive planned maintenance, particularly affecting high-margin production from the Gulf of Mexico," BP said.
It said the average price of Brent oil in the second quarter was $8.75 per barrel lower on average compared to a year earlier, while production was down 7.4 per cent.
In addition, BP said it had lower income from its Russian joint venture, TNK-BP.
BP shares were down 4.4 per cent at 424.95 pence in early afternoon trading in London.
"Today's results are poor, and the shares have been marked down as a result, as the market continues to lack confidence in the group's medium-term strategy," said Jonathan Jackson, head of equities at Killik & Co. "At the same time, there is little visibility over the outcome of events in the Gulf of Mexico and Russia."
The additional charge of $847 million for the Gulf of Mexico reflected an increase in various costs and litigation, BP said. As of June 30, BP said it had paid nearly $8.8 billion for individual, business and government claims, advances and other payments.
Chief Executive Bob Dudley said BP expects to make the final payment into the planned $20 billion Deepwater Horizon Oil Spill Trust by the end of this year.
In June, the court-supervised settlement program received 23,950 claims in addition to 1.09 million previously submitted. BP said it expects to begin making final payments in the third quarter.
In a conference call with journalists, Dudley said BP faces two big uncertainties: the upcoming trial in the United States — now set for January 14— of charges brought by the Department of Justice against BP and some contractors in the Macondo well disaster; and the company's position in Russia where BP is currently negotiating a possible sale of its half share in TNK-BP.
A sale of the TNK-BP stake is not certain, and BP remains open to a settlement of the U.S. legal case, he said.
"Until we are able to resolve one or both of those issues, we will continue to have a higher level of uncertainty over the company. But the company itself is not distracted by those two events," Dudley said.
He said BP remains committed to Russia.
"We have been working in Russia for more than 20 years. It's the largest hydrocarbon country on the planet and we have a lot to bring. And I just want to state again our commitment to being part of that at some point in the future and continuing to work in Russia," Dudley said. "So that's one I would say, stay tuned."Suggest a correction