BP cuts dividend as coronavirus speeds up push into greener energy

BP took a $9.2 billion charge due to lower commodities prices

BP Plc slashed its prize dividend and laid out a roadmap for repositioning into green energy after the COVID-19 pandemic created some of the most challenging markets in the company’s 111-year history.

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The London-based oil and gas explorer cut its dividend from 10.5 cents per share to 5.25 cents on Tuesday when it reported second-quarter earnings. The dividend cut followed a similar move by rival Royal Dutch Shell Plc in April.

BP also said it would reduce carbon emissions related to oil and gas production by 40 percent by 2030 and won’t drill for oil in any new countries. The company is targeting net zero emissions by 2050.

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BPBP PLC18.18+0.32+1.79%

“We are today announcing BP’s new strategy to deliver our net-zero ambition and a new investor proposition underpinned by a coherent financial frame,” Chairman Helge Lund said in a statement. “Our new investor proposition includes a new distribution policy, which is designed to reward our investors with committed distributions.”

BP on Tuesday reported a $16.8 billion pre-tax loss for the three months through June as the COVID-19 pandemic zapped energy demand and caused a historic drop in prices. Revenue dropped 56 percent from a year ago to $31.68 billion.

The second-quarter results included a $9.2 billion post-tax charge due to the company’s outlook for lower commodities prices and $1.7 billion in exploration write-offs. BP earned $1.8 billion in the second quarter of 2019.

In June, the company announced the elimination of 10,000 jobs and warned it could take a writedown of up $17.5 billion in the second quarter.

Looking ahead, BP sees a “volatile and challenging trading environment” due to COVID-19, which has shut down large swaths of the U.S. economy.

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BP shares fell 41 percent year-to-date through Monday, lagging the S&P 500’s 1.98 percent gain.