BP posts $5.8 billion loss in 2Q15
BP (BP) has reported a 2Q15 loss of $5.8 billion. This excludes losses related to the holding of inventories. The company attributed the losses to charges involved in the Gulf of Mexico oil spill in 2010 and low crude oil prices. According to Bloomberg, this is the biggest loss for BP since the 2Q10 Deepwater Horizon disaster.
Oversupplied markets and depressed prices eat up profits
Oil prices have fallen roughly 40% over the past year. This eats into the profits of BP and other oil and gas exploration and production companies such as Chesapeake Energy (CHK), EOG Resources (EOG), and Marathon Oil (MRO). Together, these companies make up about 6% of the Energy Select Sector SPDR ETF (XLE).
There’s approximately 1.5 million bpd (barrels per day) of oversupply in the global markets. This is due to strong production in the United States and increasing levels of exports from countries in OPEC (Organization of the Petroleum Exporting Countries) such as Iraq and Saudi Arabia.
BP writes off oil assets in Libya, suffers low production in Gulf of Mexico
The political turmoil prevailing in Libya for the past few years has forced BP to write off almost $600 million as impairment for 2Q15. The company was forced to suspend a campaign related to oil exploration due to security issues. Additionally, maintenance caused production within the Gulf of Mexico to experience a sharp fall.