BP plunged into a quarterly net loss of almost $16.85 billion as the coronavirus pandemic ravaged oil demand and prices, triggering huge asset writedowns, the British energy giant announced Tuesday.
The company responded by cutting its dividend for the first time since the Deepwater Horizon oil rig disaster in 2010 that damaged BP's finances and reputation.
"The ongoing severe impacts of the COVID-19 pandemic continue to create a volatile and challenging trading environment," BP said in Tuesday's earnings statement.
"Looking ahead, the outlook for commodity prices and product demand remains challenging and uncertain," it added.
The quarterly loss after tax of nearly $16.85 billion compared with net profit of $1.82 billion in the second quarter of 2019, BP said.
"In particular, our reset of long-term (oil) price assumptions and the related impairment and exploration write-off charges had a major impact" this time around, said chief executive Bernard Looney.
Looking to save cash, the group announced a quarterly dividend of 5.25 US cents per share, down from 10.5 cents in the first quarter.
Nevertheless BP's share price surged 7.5 percent in London midday deals.
"For quite some time now there has been ongoing speculation about the sustainability of BP's dividend, against a backdrop of rising debt levels and concern around the company's ability to continue to pay it in a world of lower oil prices, so this... decision to reduce the pay-out is welcome," said Michael Hewson, chief market analyst at CMC Markets UK.
BP rival Royal Dutch Shell last week posted a net loss of $18.1 billion for the second quarter.
- Greener future -
Alongside its results, BP set out details on how it expects to achieve "net zero" carbon emissions for the company by 2050.
Switching from an international oil company to an "integrated energy company", BP said that over the next decade its oil and gas production is expected to fall by at least one million barrels of oil equivalent a day, or 40 percent when compared with 2019 levels.
"This coming decade is critical for the world in the fight against climate change, and to drive the necessary change in global energy systems will require action from everyone," Looney said.
The Irish national, who became CEO of BP in February, had previously said he wanted "net zero" carbon emissions for the company by the middle of the century.
Looney took over the helm this year shortly before the tenth anniversary of the explosion on the BP-leased Deepwater Horizon rig in the Gulf of Mexico that triggered the worst oil spill in US history.
The disaster killed 11 employees and cost the British firm tens of billions of dollars in damages and compensation, including $1.1 billion for the latest quarter.
Greenpeace's senior climate campaigner Mel Evans on Tuesday described BP's target to slash oil output by 2030 as "a necessary and encouraging start".
- 'Massive writedowns' -
In the immediate future, BP will focus on rebuilding its finances and Looney has already decided to axe around 10,000 jobs, or 15 percent of its global workforce owing to the coronavirus fallout on energy demand and prices.
After companies worldwide closed their doors and airlines grounded planes at the height of the COVID-19 outbreak towards the end of the first quarter, oil prices dropped off a cliff, even briefly turning negative.
Prices have however rebounded sharply in recent months to around $40 a barrel as governments ease lockdowns and businesses slowly reopen.
"The collapse in oil prices has hit BP's profits hard," Hargreaves Lansdown equity analyst Nicholas Hyett said Tuesday.
"The oil major now expects oil prices to hover between $50 and $60 a barrel for the next 30 years, and that's meant massive writedowns in the value of the group's oilfields."
BP recently announced the sale of its petrochemical business to privately-owned rival Ineos for $5.0 billion.