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BP forecast to report a slide in Q2 profits

Gloomy second-quarter figures from the oil company will be made worse by an extra $10bn provision from the Deepwater Horizon accident

BP is expected to report that its profits are down by more than half despite a recent increase in oil prices.

The gloomy second-quarter figures to be revealed on Tuesday will be made worse by an extra $10bn (£6.5bn) provision that the company will take to pay for the latest legal settlement resulting from the Deepwater Horizon accident.

Shell is also to reports its figures this week as is Centrica, which will unveil a small fall in group interim earnings, but a large increase in the profits from its British Gas domestic supply subsidiary. This could rekindle rows over fuel poverty.

At BP, underlying profits are expected to have fallen to $1.6bn over the latest three months compared with $3.6bn during the same period of 2014 and $2.6bn during the first quarter of 2015.

Bob Dudley, its chief executive, will say that earlier moves to trim exploration spending and sell off assets has left BP better placed than many to weather a storm which has hit the entire industry.

He is also expected to say that the latest provision to be taken against the Macondo blowout of April 2010 should be the last – although some smaller settlements are still to be finalised.

The results are being published against a volatility in the price of oil. Brent blend crude oil has slumped from highs of $115 a barrel a year ago to less than $55, forcing the wider oil and gas sector to make thousands of redundancies from Aberdeen to Houston. But the crude price over the second quarter was up 15% on the first three months of the year.

Shell, which reports on Thursday, is also expected to report a significant decline the in second-quarter earnings, although the Anglo-Dutch company is likely to switch attention away from its immediate financial situation to the planned merger with BG, which reports its results on Friday.

Centrica, a North Sea operator but also a big six domestic energy supplier through its British Gas, is also expected to report a small fall in profits but a big shakeup.

Iain Conn, who was brought in from BP to head up Centrica, will announce plans for major cost-savings in the business. There is speculation that 2,000 jobs could go.

The Guardian News
Copyright:
The Guardian News
Published on:
July 27, 2015
Source url:
http://www.theguardian.com/business/2015/jul/26/bp-forecast-to-report-a-slide-in-q2-profits
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