LONDON -- Oil company BP has reported a loss of $1.4 billion pounds for the second quarter on the back of lower prices for oil and gas as well as reduced output.
BP reported Tuesday that its net loss compared to a net profit of $5.7 billion a year earlier. Revenue was down 9 percent at $95 billion. The company also made an additional provision of $847 million for the Gulf of Mexico oil rig disaster and cleanup, taking the total provision to just over $38 billion.
Underlying replacement cost profit for the period was $3.7 billion, down from $5.7 billion a year earlier. The figure excludes non-operating items and accounting effects.
BP said non-operating charges totaled $4.8 billion and mainly related to a lower value assigned to U.S. shale gas assets and some refineries, and the decision to suspend the $1.5 billion offshore Liberty project in Alaska.
"The underlying results were depressed by weaker oil and U.S. gas prices together with reductions in output due to extensive planned maintenance, particularly affecting high-margin production from the Gulf of Mexico," BP said.
It said the average price of Brent oil in the second quarter was $8.75 per barrel lower on average compared to a year earlier, while production was down 7.4 percent.
In addition, BP said it had lower income from its Russian joint venture, TNK-BP.
BP shares were down 2.8 percent at 432 pence in early trading London.
"The company itself recognizes the weakness shown in this quarter and has implied that it will continue into the next," said Richard Hunter, head of equities at Hargreaves Lansdown Securities.
"More positively, BP is attempting to position itself for the future, focusing on higher margin fields whilst disposing of what it considers to be non-core assets," Hunter said.
The additional charge of $847 million for the Gulf of Mexico reflected an increase in various costs and litigation, BP said. As of June 30, BP said it had paid nearly $8.8 billion for individual, business and government claims, advances and other payments.
In June, the court-supervised settlement program received 23,950 claims in addition to 1.09 million previously submitted. BP said it expects to begin making final payments in the third quarter.