BP Reports $17.7 Billion Loss, Cuts Dividend--Update
By Sarah McFarlane
LONDON -- BP PLC cut its dividend for the first time in a
decade, in a reset that would enable it to pivot away from oil and
gas and invest more in low carbon energy, marking the most dramatic
transition plans yet from an oil major.
The British energy giant aims to increase its low carbon
investments to $5 billion a year by 2030, from around $500 million,
at the same time as seeing its oil and gas production fall by 40%
from 2019 levels.
BP's decision Tuesday caps one of the worst quarters ever for
the world's biggest oil companies, all of which reported losses and
warned of more pain to come as the coronavirus pandemic continues
to sap global demand for fossil fuels.
The company's decision to halve its dividend follows a similar
move by Royal Dutch Shell PLC, which said in April it would reduce
its dividend by two-thirds. The other major oil companies -- Exxon
Mobil Corp., Chevron Corp. and Total SA -- retained their dividends
but have taken on more debt.
The dividend cuts upend what has long been a fundamental bargain
between major oil companies and their investors, centered on
reliable and large payouts.
The poor results and dividend cuts come at a time when oil
companies were already under pressure from investors to articulate
a vision for their future. Demand for fossil fuels is expected to
plateau or shrink in the coming years as the world transitions to
lower-carbon energy. Companies, including BP and Shell, have
questioned whether oil demand will fully recover to pre-pandemic
levels, or whether coronavirus could accelerate the transition to
BP reported a replacement cost loss -- a metric similar to the
net income figure that U.S. oil companies report -- of $17.7
billion for the three months ended June 30, from a profit of $1.8
billion for the year-earlier period. It reduced its quarterly
dividend to 5.25 cents a share from 10.5 cents. The last time BP
cut its dividend was in 2010 after the Deepwater Horizon oil spill
in the Gulf of Mexico.
BP said its new dividend policy entailed a fixed amount, and it
will return at least 60% of surplus cash as share buybacks once the
company's balance sheet has been strengthened.
Write to Sarah McFarlane at email@example.com
(END) Dow Jones Newswires
August 04, 2020 03:38 ET (07:38 GMT)
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