ROME: BP is to push back billions of dollars of spending on new projects and step up job cuts after a $9.8bn charge from the Deepwater Horizon disaster swung the company to a second quarter loss.
The UK-based energy giant said that capital spending this year would fall to less than the $20bn predicted six months ago — a drop of more than 13 per cent compared to 2014 — as BP sought to safeguard investor dividends by deferring investment and squeezing cost savings from suppliers.
BP, the first of the big energy companies to report first-half results this week, set the scene for further cost-cutting and disposals as the sector grapples with the oil price crash. Bob Dudley, chief executive, likened the industry downturn to the slump of 1986.
Among the BP projects that could slip is an extension of its deepwater Mad Dog field in the Gulf of Mexico. Norway’s Statoil also trimmed capital spending as it announced forecast-beating operating profits for the second quarter.
Brent crude prices have fallen more than 50 per cent to $53 per barrel, from a peak of $115 last summer.
BP reported $1.3bn in underlying replacement cost profits — analysts’ preferred earnings measure — for the three months to the end of June, down 64 per cent compared to the same time last year and worse than expected.
An $18.7bn deal struck this month by BP with US authorities, settling nearly all outstanding claims related to the 2010 Gulf of Mexico oil spill, led to a one-off provision that took total liabilities for the disaster to $54.6bn and pushed the company to a pre-tax loss of $6.3bn in the quarter.
Mr Dudley, who has maintained that a prolonged period of low prices lies ahead, said that the company was stress-testing new developments at $60 a barrel, sharply lower levels than at the start of the year.
