Energy giant BP (NYSE:BP) reported a significant loss for the second quarter on Tuesday, after downgrading the value of some of its assets on expectations of lower commodity prices.
Second-quarter underlying replacement cost profit, used as a proxy for net profit, came in at a loss of $6.7 billion, meeting expectations of analysts. That compared with a net profit of $800 million in the first quarter of the year.
BP also announced that it had halved its dividend to 5.25 cents per share for the quarter, compared to 10.5 cents per share for the first three months of the year.
The reported loss for the quarter was $16.8 billion, which includes a post-tax charge of $10.9 billion for non-operating items. It compares to a loss of $4.4 billion over the first three months of 2020.
The breakdown of this figure included $9.2 billion in impairments across the group, largely due to BP’s revised forecast for oil and gas prices over the next 30 years, and $1.7 billion of exploration writeoffs.
The U.K.-based oil and gas company said last month that it could incur non-cash impairment charges and writeoffs in the second quarter, estimating an aggregate range of $13 billion to $17.5 billion after tax. At the time, BP said the "enduring" impact of the coronavirus pandemic had prompted the firm to lower its oil and price forecasts through to 2050.
BP shares began Tuesday added $1.13, or 5.1%, to $23.22.
