BP slashed its dividend for the first time in a decade and set out new targets to accelerate its shift to greener energy after the coronavirus pandemic upended the oil business.
The u-turn in its dividend policy was expected after European peer Royal Dutch Shell slashed its own payout in April. Big Oil’s generous dividends have long been its main attraction to shareholders, and the move –hastened by the virus but made inevitable by the transition to cleaner energy – redraws the company’s investment profile.
BP paired the payout news with more details for investors of its net-zero strategy – bringing forward announcements expected in September. It is targeting a radical 40 per cent decline in hydrocarbon production, a 10-fold increase in low-carbon investment and a leap in renewable-power capacity to around 50 gigawatts by 2030. It would not explore for oil in any new countries.
“Whatever the devils that will no doubt emerge in the detail, this is a pretty big change from BP,” Greenpeace UK’s chief scientist Doug Parr tweeted in an unusual show of support.
BP shares surged as much as 8.3 per cent on Tuesday, trading up 7.4 per cent at 10:14am London time (1:14 UAE time). That’s the biggest gain on the Stoxx Europe 600 Oil & Gas index, suggesting that the dividend cut was already priced in.
Chief executive Bernard Looney is taking the opportunity presented by the virus to speed up the changes he needs to make to fulfill his vision of a low-carbon future. But the company went into the crisis with high debt and hefty payouts – it even increased the dividend for the fourth quarter – meaning more pain now.
BP reported an adjusted net loss of $6.68 billion (Dh24.51bn) for the second quarter, following a $2.81bn profit a year earlier. It was a narrower loss than expected as BP said its trading division performed strongly. It cut its dividend to 5.25 cents per share and scrapped its progressive payout policy.
“It’s very simple,” Mr Looney said about the 50 per cent dividend cut. “The change is rooted in strategy, deeply rooted in strategy, and amplified by Covid-[19].”
Net debt fell 20 per cent from the previous quarter to $40.9bn, while gearing – the ratio of debt-to-equity – dropped to 33.1 per cent from 36.2 per cent. Despite the decline, the level remains well above BP’s comfort range of 20-30 per cent. The company aims to reduce debt to $35bn, at which point it plans to return at least 60 per cent of surplus cash flow to shareholders via buybacks.
“This strategic shift is encouraging – much more clarity, apparently not sacrificing returns,” Stuart Joyner, an analyst at Redburn, said in a note. BP is “making proper progress towards pleasing ESG investors” as the “journey unfolds towards a higher-rated, lower-geared company”.
Virtually every part of BP’s business, from its forecourts to its oil and gas production, was hit by the pandemic’s devastating impact on fuel consumption. But there was one bright spot last quarter: oil trading delivered an “exceptionally strong result”, BP said.
The oil major’s sprawling trading unit capitalised on the period’s volatility and in particular made money from so-called contango plays. That trade involves putting cheap oil into storage and simultaneously selling it at higher prices on the forward market. Total, Shell and Equinor all reaped the benefits of contango, with trading gains saving them from a quarterly loss.
American counterparts Exxon Mobil and Chevron, which have a more timid approach to trading, posted their worst set of quarterly results of the modern era.
BP on Tuesday also said it is targeting a 30-35 per cent decline in emissions from its operations and a 35-40 per cent cut in carbon output from oil and gas production by 2030.
Over the same time, BP saw its refining throughput falling to about 1.2 million barrels per day from 1.7 million bpd in 2019. It plans to increase investment in low-carbon energy to around $5bn a year from about $500m
The company's renewable power capacity will rise to around 50GW from 2.5GW last year, while electric vehicle charging points will jump to more than 70,000 from 7,500, it said in the statement.
COMPANY%20PROFILE
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Huddersfield Town permanent signings:
- Steve Mounie (striker): signed from Montpellier for £11 million
- Tom Ince (winger): signed from Derby County for £7.7m
- Aaron Mooy (midfielder): signed from Manchester City for £7.7m
- Laurent Depoitre (striker): signed from Porto for £3.4m
- Scott Malone (defender): signed from Fulham for £3.3m
- Zanka (defender): signed from Copenhagen for £2.3m
- Elias Kachunga (winger): signed for Ingolstadt for £1.1m
- Danny WIlliams (midfielder): signed from Reading on a free transfer
Innotech Profile
Date started: 2013
Founder/CEO: Othman Al Mandhari
Based: Muscat, Oman
Sector: Additive manufacturing, 3D printing technologies
Size: 15 full-time employees
Stage: Seed stage and seeking Series A round of financing
Investors: Oman Technology Fund from 2017 to 2019, exited through an agreement with a new investor to secure new funding that it under negotiation right now.
The Bio
Favourite place in UAE: Al Rams pearling village
What one book should everyone read: Any book written before electricity was invented. When a writer willingly worked under candlelight, you know he/she had a real passion for their craft
Your favourite type of pearl: All of them. No pearl looks the same and each carries its own unique characteristics, like humans
Best time to swim in the sea: When there is enough light to see beneath the surface
UPI facts
More than 2.2 million Indian tourists arrived in UAE in 2023
More than 3.5 million Indians reside in UAE
Indian tourists can make purchases in UAE using rupee accounts in India through QR-code-based UPI real-time payment systems
Indian residents in UAE can use their non-resident NRO and NRE accounts held in Indian banks linked to a UAE mobile number for UPI transactions
Five famous companies founded by teens
There are numerous success stories of teen businesses that were created in college dorm rooms and other modest circumstances. Below are some of the most recognisable names in the industry:
- Facebook: Mark Zuckerberg and his friends started Facebook when he was a 19-year-old Harvard undergraduate.
- Dell: When Michael Dell was an undergraduate student at Texas University in 1984, he started upgrading computers for profit. He starting working full-time on his business when he was 19. Eventually, his company became the Dell Computer Corporation and then Dell Inc.
- Subway: Fred DeLuca opened the first Subway restaurant when he was 17. In 1965, Mr DeLuca needed extra money for college, so he decided to open his own business. Peter Buck, a family friend, lent him $1,000 and together, they opened Pete’s Super Submarines. A few years later, the company was rebranded and called Subway.
- Mashable: In 2005, Pete Cashmore created Mashable in Scotland when he was a teenager. The site was then a technology blog. Over the next few decades, Mr Cashmore has turned Mashable into a global media company.
- Oculus VR: Palmer Luckey founded Oculus VR in June 2012, when he was 19. In August that year, Oculus launched its Kickstarter campaign and raised more than $1 million in three days. Facebook bought Oculus for $2 billion two years later.
Gothia Cup 2025
4,872 matches
1,942 teams
116 pitches
76 nations
26 UAE teams
15 Lebanese teams
2 Kuwaiti teams
Company%20profile
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What is the FNC?
The Federal National Council is one of five federal authorities established by the UAE constitution. It held its first session on December 2, 1972, a year to the day after Federation.
It has 40 members, eight of whom are women. The members represent the UAE population through each of the emirates. Abu Dhabi and Dubai have eight members each, Sharjah and Ras al Khaimah six, and Ajman, Fujairah and Umm Al Quwain have four.
They bring Emirati issues to the council for debate and put those concerns to ministers summoned for questioning.
The FNC’s main functions include passing, amending or rejecting federal draft laws, discussing international treaties and agreements, and offering recommendations on general subjects raised during sessions.
Federal draft laws must first pass through the FNC for recommendations when members can amend the laws to suit the needs of citizens. The draft laws are then forwarded to the Cabinet for consideration and approval.
Since 2006, half of the members have been elected by UAE citizens to serve four-year terms and the other half are appointed by the Ruler’s Courts of the seven emirates.
In the 2015 elections, 78 of the 252 candidates were women. Women also represented 48 per cent of all voters and 67 per cent of the voters were under the age of 40.
Our legal columnist
Name: Yousef Al Bahar
Advocate at Al Bahar & Associate Advocates and Legal Consultants, established in 1994
Education: Mr Al Bahar was born in 1979 and graduated in 2008 from the Judicial Institute. He took after his father, who was one of the first Emirati lawyers
ELIO
Starring: Yonas Kibreab, Zoe Saldana, Brad Garrett
Directors: Madeline Sharafian, Domee Shi, Adrian Molina
Rating: 4/5
Director: Laxman Utekar
Cast: Vicky Kaushal, Akshaye Khanna, Diana Penty, Vineet Kumar Singh, Rashmika Mandanna
Rating: 1/5
EA Sports FC 26
Publisher: EA Sports
Consoles: PC, PlayStation 4/5, Xbox Series X/S
Rating: 3/5
Company profile
Name: GiftBag.ae
Based: Dubai
Founded: 2011
Number of employees: 4
Sector: E-commerce
Funding: Self-funded to date
Our legal consultant
Name: Dr Hassan Mohsen Elhais
Position: legal consultant with Al Rowaad Advocates and Legal Consultants.
