BP profits plunge in second quarter

BP underlying profits almost halved in the second quarter but the oil giant reduced the level of statutory losses for the first six months of the year and said it was drawing a line under the liabilities for the Deepwater Horizon oil disaster at $61.6bn.

Maintaining its September dividend payment, the FTSE 100 behemoth reported an underlying replacement cost profit of $720m in the three moths to the end of June, down 45% from the same period last year.

While at the reported level the loss before tax of $3.38bn for the second quarter was less than half its comparative from 2015 and the $4.24bn loss for the first half of the year was an improvement from $6.34bn last year.

BP took a $2.8bn charge in the quarter including a non-operating charge of $5.2bn associated with the Deepwater Horizon liabilities and other positive tax credits as the company made progress in resolving outstanding claims from the oil spill, which was confirmed by a court order of 14 July and meant it can now reliably estimate all remaining material liabilities in connection with the incident.

Chief executive Bob Dudley said he was "very pleased to have finally drawn a line under the material liabilities for Deepwater Horizon" and said the company had learned from the accident and was now stronger and more disciplined, "managing the business for value over volume".

On the outlook he added: "As we look forward we expect the external environment to remain challenging, but we have a strong pipeline of new projects which will add 500,000 barrels of oil equivalent a day of new production capacity by the end of next year."

He maintained that the improvements to the business will "stick at any oil price" and sees "a much stronger outlook" that will allow BP to focus on growth.

The dividend for the quarter remained unchanged at 10 cents per ordinary share or $0.6 per ADS.

Underlying operating cash flow for the quarter - before pre-tax Gulf of Mexico payments - was $5.5bn. With cash costs over the past four quarters around $5.6bn lower than in 2014, Dudley said he continued to expect these costs for 2017 to be $7bn lower than in 2014.