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BP logs US$1.4b loss, draws line under oil disaster

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BP faced another net loss in the second quarter but has now drawn a line under the 2010 Gulf of Mexico oil spill disaster, the British energy giant said Tuesday.

[LONDON] BP faced another net loss in the second quarter but has now drawn a line under the 2010 Gulf of Mexico oil spill disaster, the British energy giant said Tuesday.

The company posted a loss after taxation of US$1.4 billion for the three months to June, which however compared with a far larger loss of US$5.8 billion for the second quarter of 2015.

BP also booked a net post-tax non-operating charge of US$2.8 billion for costs linked to the oil disaster. That included a pre-tax non-operating charge of US$5.2 billion.

The energy major had already revealed earlier this month that the final cost for the spill stood at US$61.6 billion, including the latest second-quarter hit.

BP added that this year's capital expenditure was now expected to fall below US$17 billion.

"We are very pleased to have finally drawn a line under the material liabilities for Deepwater Horizon," said chief executive Bob Dudley in the results statement.

"We will always be mindful of what we have learned from that tragic accident. BP today is a stronger, more focused and more disciplined company.

"We continue to actively develop a strong, balanced portfolio and we are managing the business for value over volume.

"Our relentless group-wide focus on capital and cost discipline is helping BP to become much more efficient while maintaining the investment needed for future growth."

Back in 2010, an explosion on the Deepwater Horizon oil rig killed 11 men off the coast of Louisiana and caused 134 million gallons (507 million litres) of oil to spew into Gulf waters.

It took 87 days to cap the out of control well some 1,500 metres (5,000 feet) below sea level, and the oil slick stretched across an area the size of Virgina, blackening beaches across five US states and hitting tourism and fishing.

London-listed BP had clocked enormous losses last year on costs linked to the deadly spill. It has axed thousands of jobs and sold billions of dollars of assets to meet the clean-up bill.

"The sigh of relief emanating from BP HQ is almost palpable as the Gulf of Mexico spill is finally consigned to the history books," noted Richard Hunter, head of research at Wilson King Investment Management.

"This is not to say that the challenges are over, not least of which is an underlying oil price still markedly short of the level which would provide comfort for the company."

Stripping out exceptional costs and changes to the value of oil inventories, BP also reported Tuesday a net profit of US$720 million in the second quarter, down 45 per cent from a year earlier on low oil prices.

Market expectations had been for profit of US$819 million according to analysts polled by Bloomberg.

"Compared with a year earlier, the underlying second-quarter result was impacted by lower oil and gas prices and significantly lower refining margins, but this was partly offset by the benefit of lower cash costs throughout the group as well as lower exploration write-offs," added Mr Dudley.

"We are delivering significant improvements to the business that will stick at any oil price. We are now well down the path of transforming our business to compete, whatever the future holds."

AFP