BP reports a record $17bn quarterly loss
BP IS to launch a $30bn (£19bn) asset sale in a bid to offset some of the Gulf of Mexico spill costs after the group reported record quarterly losses of $17bn for the last three months, one of the worst in corporate history.
The asset sale, mainly in BP’s upstream business is likely to take 18 months to complete and will see BP shed over 10 per cent of its $250bn asset base – a threefold increase on its initial $10bn target.
BP said the sales will leave the group’s portfolio looking leaner but with a “higher quality exploration and production business”. Bob Dudley, the group’s incoming chief executive said BP will emerge a smaller and wiser company as a result.
Reporting its second quarter results yesterday, BP revealed it has set aside $32.2bn, including the $20bn escrow fund, to pay for the Gulf oil spill response.
“We expect we will pay the substantial majority of the remaining direct spill response costs by the end of the year. Other costs are likely to spread over a number of years, including any fines and penalties,” said outgoing chief executive Tony Hayward.
Included in the spill provision is $2.9bn for the cost of the response and $29.3bn for future costs.
The impact of the Gulf catastrophe has already wiped more than £50bn off of BP’s market value. The group’s shares closed three per cent lower at 404.85p yesterday. Investors had cheered reports of Hayward’s imminent departure on Monday, sending BP shares up nearly five per cent.
“The costs and charges involved in meeting our commitments in responding to the Gulf of Mexico oil spill are very significant and this reported loss reflects that,” said Hayward.
However, BP’s underlying performance, excluding the spill, was strong in the second quarter, with profits of $5bn and operating cash flow of $8.9bn, up 31 per cent from the same period of 2009.