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BP investors stay strong as oil giant’s profits fall

BP CEO Bob Dudley said positioning the business for a sustained period of weaker oil prices was the right course to take.
BP CEO Bob Dudley said positioning the business for a sustained period of weaker oil prices was the right course to take.

Shares in BP rose despite the oil major racking up a £2.7 billion loss in the first six months of the year.

The plunge into the red included another £6.3bn hit from the Deepwater Horizon disaster and came as the oil price remained low.

Earlier this month the company reached a £12 bn settlement with the US Department of Justice over Deepwater, which it said would settle all US federal, state and local claims. The total bill for the tragedy so far is now £35.1bn.

However, even with the charge stripped out, BP posted sharply lower half-year underlying replacement cost profits of £2.5bn, down from the £4.4bn it reported a year earlier.

The group is battling against falling oil prices, with the cost of crude dropping to $62 a barrel on average in the second quarter from $110 a year earlier.

Chief executive Bob Dudley said: “In the past few weeks oil prices have fallen back in response to continued oversupply and market weakness and the recent agreements regarding Iran.

“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.”

Mr Dudley has led a major overhaul to shore up the group, slashing jobs, shrinking production and selling more than £45bn of assets

The group revealed further charges relating to the restructuring of £174 million in the second quarter, with just shy of £1bn expected to be spent on the project in the full-year.

BP’s downstream operation the part of the business that includes refineries and manufacturing as well as fuel marketing and global oil supply reported a profit of £1bn in the second quarter, up from£600m a year earlier.

The group’s upstream business which includes oil and natural gas field development, production, storage and processing saw profits in the second quarter tumble to £147m from £2.6bn a year earlier.

“The external environment remains challenging, but BP moved quickly in response and we continue to do so,” added Mr Dudley. “Our work to increase efficiency and reduce costs is embedding sustainable benefits throughout the group, and we continue with capital discipline and divestments.”

Shares closed 1.38% (5.35p) up at 392.65p on Tuesday.