BP’s $4.8 billion write-downs lead to $1.4 billion in losses for Q2

BP reported losses in the second quarter of $1.4 billion, reflecting both a drop in oil and natural gas prices, lowered production and legal costs from the 2010 Gulf of Mexico accident.

The disappointing returns, which were larger than many analysts predicted, are a contrast to the $5.7 billion in net income for second quarter last year.

“This has been an unusual quarter and we are not satisfied with it,” said Bob Dudley, CEO of BP, in a video statement released with the second quarter results. “The unusual drop from the very beginning to the very end of the quarter in oil and gas prices, it has certainly impacted our results.”

BP recorded $4.8 billion in write-downs and impairments for the second quarter, up from $1.4 billion for the same period in 2011. The British-based company reported $95 billion of revenue for the second quarter, down from $104 billion for the same time period last year.

BP also increased its total provision for the Deepwater Horizon litigation to $38 billion, making an $847 million additional provision in the second quarter. The company has said it plans to make its final payments for a settlement with individual plaintiffs by the end of the third quarter and that its $20 billion trust fund will be fully funded by the end of the year.

Dudley explained that a lag in pricing duties in Russia for exports further contributed to the loss, creating higher expenses even as prices fell, which generated an additional $700 million in expenses.

BP is negotiating to sell its half share in TNK-BP in Russia, but Dudley said in a conference call with analysts that the company still intends to maintain a long-term presence in the country.

“We have been working in Russia for more than 20 years,” Dudley said. “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. So that’s one I would say, stay tuned.”

Dudley also said that BP is emphasizing safety in all its operations, taking the time to do scheduled maintenance, such as the replacement of all the subsea equipment for the Atlantis platform in the Gulf of Mexico.

“Safety is first in what we are doing,” Dudley said. “We are embedding the standardization of change as we go through this transformation that may not show up this quarter, but I absolutely know are going to be part of what we do as we head through the backend of this year when projects will come back on and the maintenance is over.”