BP cuts dividends on plummeted earnings and poor oil demand

BP cuts dividends on plummeted earnings and poor oil demand

Following the dividend cut by Shell the other day, it looks like U.K. oil giant BP would follow in its footsteps.

Oil is having a poor outlook as major companies have been slashing dividends here and there. This week has been terrible for oil companies as far as earnings are concerned, and the analysts’ projections were on point.

The U.K. oil giant BP has reported an adjusted net loss of over US$6.68 billion [AU$9.37 billion] for the second quarter. In addition, they have cut their dividend to 5.25 cents a share.

Adding more tensions in the oil industry, Saudi Arabia may also cut its September official selling price (OSP) for crude sold in Asia as per Reuters.

An opportunity in an oil crisis?

When asked about the dividend cut, BP CEO Bernard Looney told Bloomberg:

“It’s very simple. The change is rooted in strategy, deeply rooted in strategy, and amplified by COVID.”

This crisis has given the CEO an opportunity to push the big changes needed to fulfill his vision of a low-carbon future.

Paving the road to renewable energy

All hope is not lost for the major U.K. oil giant as they have also announced to shift from being a traditional oil company to an “integrated energy company” and said it expects to achieve “net zero” carbon emissions by 2050, per BBC.

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In February we set out our ambition to become a net zero company by 2050 or sooner and help the world get to net zero. Rightly, there were questions about how we would do it and what the milestones would be along the way. So today, we are announcing a new strategy that will reshape our business as we pivot from an international oil company focused on producing resources to an integrated energy company focused on delivering solutions for customers. Within 10 years, we aim to: – Increase our annual low carbon investment 10-fold to around $5 billion a year; – Focus our oil and gas business on value, reducing production by 40%, with no exploration in new countries; – Partner with 10-15 cities and three core industries in decarbonization efforts and double customer interactions to 20 million per day. And to deliver on our net zero ambition by: – Lowering emissions from our operations by 30-35% by 2030; – Lowering emissions associated with carbon in our upstream oil and gas production 35-40% by 2030. – Reducing the carbon intensity of the products we sell by more than 15% by 2030. All of this means we aim to be a very different company by 2030. And that’s what the world needs. Take a look at the link in my bio for more. #bpNetZero

A post shared by Bernard Looney (@bernardlooney_bp) on

Despite the drop forecasts in oil and gas production, the U.K. giant assures its investors that it is doing their best to steer the company in the right direction.

This may be an opportunity for BP and the rest of the oil and gas giants to invest in what’s less harmful to the environment. As of this writing, the BP stock price increased by over 6%, and this might indicate a positive sentiment among investors.

Featured image courtesy of ddzphoto/Pixabay

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