British Petroleum (BP’s) second-quarter profit slumped by nearly two thirds from a year ago on Tuesday as it grappled with lower crude prices and a huge 10.8 billion dollar charge from the 2010 Gulf of Mexico oil spill.
The British oil and gas company has also cut its planned full-year capital spending again to “below $20 billion’’, after cutting it 13 per cent to $20 billion earlier this year.
BP reached an $18.7 billion settlement with the U.S. government and five states this month to resolve most claims from the oil spill five years ago, the largest corporate settlement in U.S. history.
Besides, the company said it had also agreed to pay up to $1 billion to resolve claims from local government entities.
The settlement will take cumulative pre-tax charges for the Macondo rig explosion and spill that killed 11 workers to $55 billion.
The profits were also hit by a $600 million exploration write off in Libya as a result of security issues, leaving the firm’s net income, at 1.3 billion dollars, below analysts’ expectations of $1.64 billion.
BP also raised costs linked to restructuring following the oil price slide to 1.5 billion dollars from the $1 billion announced in December.
“The external environment remains challenging,’’ Chief Executive Officer Bob Dudley said in a statement.
BP shares traded 1 per cent higher in London on Tuesday, outperforming a 0.6 per cent gain for the European oil and gas sector index.
