LON­DON-Oil com­pa­ny BP re­port­ed yes­ter­day a loss of US$1.4 bil­lion for the sec­ond quar­ter due to low­er prices and pro­duc­tion and as it wrote down the val­ue of some as­sets, in­clud­ing shale gas in the US. BP PLC said its net loss, which was big­ger than the mar­ket con­sen­sus, com­pared with a net prof­it of US$5.7 bil­lion a year ear­li­er. Rev­enue was down 9 per cent at US$95 bil­lion. The com­pa­ny al­so made an ad­di­tion­al pro­vi­sion of US$847 mil­lion for the Gulf of Mex­i­co oil rig dis­as­ter and cleanup, tak­ing the to­tal pro­vi­sion to just over US$38 bil­lion.

Un­der­ly­ing re­place­ment cost prof­it for the pe­ri­od was US$3.7 bil­lion, down from US$5.7 bil­lion a year ear­li­er. The fig­ure ex­cludes non-op­er­at­ing items and ac­count­ing ef­fects. BP said non-op­er­at­ing charges to­taled US$4.8 bil­lion and main­ly re­lat­ed to a low­er val­ue as­signed to US shale gas as­sets and some re­finer­ies, as well as the de­ci­sion to sus­pend the US$1.5 bil­lion off­shore Lib­er­ty project in Alas­ka.

"The un­der­ly­ing re­sults were de­pressed by weak­er oil and US 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 US$8.75 per bar­rel low­er on av­er­age com­pared to a year ear­li­er, while pro­duc­tion was down 7.4 per cent.

In ad­di­tion, BP said it had low­er in­come from its Russ­ian joint ven­ture, TNK-BP. BP shares were down 4.4 per cent at 424.95 pence in ear­ly af­ter­noon trad­ing in Lon­don. "To­day's re­sults are poor, and the shares have been marked down as a re­sult, as the mar­ket con­tin­ues to lack con­fi­dence in the group's medi­um-term strat­e­gy," said Jonathan Jack­son, head of eq­ui­ties at Kil­lik & Co. "At the same time, there is lit­tle vis­i­bil­i­ty over the out­come of events in the Gulf of Mex­i­co and Rus­sia."

The ad­di­tion­al charge of US$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 US$8.8 bil­lion for in­di­vid­ual, busi­ness and gov­ern­ment claims, ad­vances and oth­er pay­ments.

Chief Ex­ec­u­tive Bob Dud­ley said BP ex­pects to make the fi­nal pay­ment in­to the planned US$20 bil­lion Deep­wa­ter Hori­zon Oil Spill Trust by the end of this year. 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.

In a con­fer­ence call with jour­nal­ists, Dud­ley said BP faces two big un­cer­tain­ties: the up­com­ing tri­al in the Unit­ed States- now set for Jan­u­ary 14-of charges brought by the De­part­ment of Jus­tice against BP and some con­trac­tors in the Ma­con­do well dis­as­ter; and the com­pa­ny's po­si­tion in Rus­sia where BP is cur­rent­ly ne­go­ti­at­ing a pos­si­ble sale of its half share in TNK-BP.

A sale of the TNK-BP stake is not cer­tain, and BP re­mains open to a set­tle­ment of the US le­gal case, he said. "Un­til we are able to re­solve one or both of those is­sues, we will con­tin­ue to have a high­er lev­el of un­cer­tain­ty over the com­pa­ny. But the com­pa­ny it­self is not dis­tract­ed by those two events," Dud­ley said. He said BP re­mains com­mit­ted to Rus­sia.

"We have been work­ing in Rus­sia for more than 20 years. It's the largest hy­dro­car­bon coun­try on the plan­et and we have a lot to bring. And I just want to state again our com­mit­ment to be­ing part of that at some point in the fu­ture and con­tin­u­ing to work in Rus­sia," Dud­ley said. "So that's one I would say, stay tuned."

AP