BP halves dividend as Covid-19 turmoil pushes oil major to loss

BP slashed its dividend for the first time since the Deepwater Horizon disaster in 2010 as the UK oil major bolsters its finances after the coronavirus pandemic roiled the industry.

The company cut the shareholder payout by 50 per cent for the second quarter to 5.25 US cents a share, marking a drastic turnround since the start of the year when BP’s confidence about cash generation led it to raise the dividend to 10.50 cents.

The collapse in energy demand triggered by government measures to curb the spread of coronavirus has roiled the entire energy sector and crippled earnings. Brent crude, which traded at $70 a barrel in early January dropped to below $20 in April. It is now hovering at around $44.

In the three months to June 30, underlying replacement cost losses — the measure tracked most closely by analysts — were at $6.7bn versus a profit of $2.8bn in the same period last year.

Analysts had forecast a loss of $6.8bn, with the figure including exploration asset write-offs which are not treated as one-off items.

The reported loss tallied at $16.8bn, which is the biggest since the huge charge related to the Gulf of Mexico accident a decade ago.

Ahead of a strategy presentation next month by chief executive Bernard Looney, who started in his role in February, BP said over the next decade it aims to have increased its annual low carbon investment 10-fold, to around $5bn a year.

The company, which said it will commit to returning at least 60 per cent of surplus cash as share buybacks, is planning to cut emissions and invest heavily in renewable energy. But the bulk of capital spending will still be focused on oil and gas.

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