UK-based BP Plc posted a $6.7 billion net loss in the second quarter of 2020 and cut its dividend in half.
BP, which is one of the world’s most powerful oil companies, has been navigating a rugged landscape created by coronavirus pandemic.
In June, BP announced 10,000 job cuts and has been struggling to revive its business. The oil distributor is speeding to reposition in September but has yet to provide more details.
BP intends to cut its aggregate oil and natural gas production by 40% by 2030 — from 2.6 million barrels per day to around 1.5 million barrels per day — and says it’s planning no exploration in new countries.
BP plans to increase its low-carbon energy investments to $5 billion annually by 2030 — a tenfold increase but still much smaller than current spending on its core businesses.
BP, as part of that plan, hopes to develop 50 gigawatts of renewable generation capacity, which is 20 times last year’s levels.
Other goals include expansion of its hydrogen and electric vehicle charging units, with plans for a roughly tenfold increase in EV charging points to 70,000 by 2030.
It is BP’s first dividend cut since the 2010 Deepwater Horizon disaster in the Gulf of Mexico and comes three months after rival Shell slashed its investor payouts.
BP said the cut to 5.25 cents per share is part of the broader repositioning.
It plans to keep the dividend at the lower level but said shareholders would benefit because BP intends to return at least 60% of surplus cash to investors once its net debt falls to $35 billion.
The company said the dividend cut is part of a new “investor proposition” that positions the company to deal with the pandemic and the longer-term move toward lower-carbon sources.
“The board believes setting a dividend at this level takes into account the current uncertainty regarding the economic consequences of the COVID pandemic, supports BP’s balance sheet and also provides the flexibility required to invest into the energy transition at scale,” BP said.
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