BP Swings To $4.2bn Loss In First Half

Costs associated with the Gulf of Mexico disaster and falling oil prices pushed BP to a loss of $4.2bn (£2.7bn) in the first half of its financial year.

The group said the profit figure reflected a pre-tax charge of $9.8bn that it booked in the second quarter.

It was the result of a deal signed earlier this month to settle a series of legal cases related to the Gulf spill in 2010, taking the total to date to $54.6bn.

To give you an idea of the scale of the amount, that figure would almost be enough to buy Tesco (Xetra: 852647 - news) three times over.

The company is still dealing with claims made by individuals and businesses in the US.

BP made a replacement cost profit of $6.7bn in the same period last year but, leaving the effects of the Deepwater Horizon accident aside, oil prices have fallen more than 50% over the past 12 months.

BP - like its rivals - has responded by scaling back production, investment and jobs.

In addition, it has sold assets worth $70bn over the past five years to help pay for the Gulf spill.

The oil price environment meant underlying profits, which reflect the day-to-day performance of the business, fell from $6.9bn in the first half of 2014 to $3.9bn in the first six months of this financial year.

Chief executive Bob Dudley said: "In the past few weeks oil prices have fallen back in response to continued oversupply and market weakness and the recent agreements regarding Iran.

"I am confident that positioning BP for a period of weaker prices is the right course to take, and will serve the company well for the future."