LONDON (AP) — BP reported a second-quarter loss Tuesday after the London-based oil company set aside another $10.8 billion to cover the cost of the Deepwater Horizon accident.
The net loss of $5.82 billion compared with net income of $3.37 billion a year earlier. Underlying replacement cost profit, which strips out one-time items and changes in the value of inventories, fell 64 percent to $1.31 billion as oil prices remained low.
The report is the first since BP announced a deal that will provide a further $18.7 billion to five U.S. states affected by the 2010 accident that killed 11 workers and spewed millions of gallons of crude into the Gulf of Mexico. BP said the settlement would bring its full obligations $54.6 billion.
Besides dealing with the weight of the Deepwater Horizon disaster, BP is like other oil giants struggling to deal with the plunge in oil prices. The price of Brent crude, an international variety of oil, averaged $62 a barrel in the second quarter — compared to $110 a barrel in the same quarter a year earlier.
“In the past few weeks oil prices have fallen back in response to continued oversupply and market weakness and the recent agreements regarding Iran,” BP CEO Bob Dudley said. “I am confident that positioning BP for a period of weaker prices is the right course to take, and will serve the company well for the future.”
Dudley said the company is responding by increasing efficiency and continuing “with capital discipline and divestments.”
Uncertainty in the Middle East has also had an impact. In Libya, BP reported exploration write-downs and other costs totaling $598 million. This includes a $432 million write-off because there is “significant uncertainty on when drilling operations might be able to proceed.”
Fadel Gheit, a managing director at Oppenheimer & Co. Inc. said that BP — like other major integrated oil companies — had been expected to report the lowest quarterly earnings in years.
“The earnings outlook remains challenging,” he said.