BP’s profits hit by spill charge

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BP’s second-quarter profits missed expectations after the British oil and gas company took a $10.8 billion pretax charge related to a settlement of the 2010 Gulf of Mexico spill. Hayley Platt reports

BP’s profits hit by spill charge

The Gulf of Mexico oil disaster is still hurting BP – five years on.

Profits at the oil and gas giant slumped by nearly two thirds from a year ago after a $10.8 billion spill charge was agreed in the second quarter.

That followed an $18.7 billion settlement – the largest in corporate history – to resolve most of the claims.

It wasn’t the only problem – low oil prices also had an impact.

Net income was $1.3billion – lower than the expected $1.6 billion.

But BP’s shares rose slightly – Justin Urquhart Stewart is from Seven Investment Management.

SOUNDBITE: Justin Urquhart Stewart, Seven Investment Management, saying (English):

“Whether it’s dealing with Russia, whether it’s dealing with the Gulf of Mexico. If they can start actually having some opportunity to draw a line as the phase goes to say actually this is how much it’s going to cost, it now looks as though that maybe the case.”

Profits were also hit by a $600 million exploration write-off in Libya over security issues.

And in a sign it was preparing for an extended period of low prices it cut its planned full-year capital spending for a second time this year to below $20 billion.

SOUNDBITE: Justin Urquhart Stewart, Seven Investment Management, saying (English):

“A lot of their development areas are no longer as valuable as before or necessary profitable or come to that developing further fuel, so all oil companies are being hit at the moment.”

Norway’s Statoil did better than some.

It’s second quarter operating profit of $2.74 billion dollars was down from the previous year but better than expected.

That was partly due to a strong performance in its oil refining segment.

It’s sticking to its dividend pledges – so too is BP.

Tags : charge, Spill, Profits, Bps

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