The $32.2 billion charge was one of the three highlights in the second-quarter earnings report, with BP also confirming that CEO Tony Hayward is being replaced by Bob Dudley, and BP saying it will sell another $23 billion in assets over the next year and a half.
Ahead of BP's earnings, there were expectations that the oil company would take a one-time charge to its second-quarter earnings. Some analysts expected a second-quarter loss of between $13 billion and $15 billion due to oil spill costs, and one of the worst quarters from a British company in history.
The $32.2 billion charge includes Gulf of Mexico oil spill costs to date of $2.9 billion and a charge of $29.3 billion for future costs, including the funding of the $20 billion escrow fund.Outgoing BP CEO Tony Hayward said in the earnings release, "We expect we will pay the substantial majority of the remaining direct spill response costs by the end of the year. Other costs are likely to be spread over a number of years, including any fines and penalties, longer-term remediation, compensation and litigation costs." BP said it could not provide a reasonable estimate for these additional costs. After adjusting for the non-operating items and fair value accounting effects that resulted in the $17 billion loss, BP's second-quarter underlying replacement cost profit was $5 billion, compared to $2.9 billion in the second quarter of 2009. The $17 billion loss may be the worst quarter ever from a British company, based on estimates provided on Monday. In the first quarter of 2010, BP earned $1.75 on revenue of $74.2 billion, and reported a net profit of $6 billion.
|Robert Dudley (above) will replace Tony Hayward as BP's CEO.|
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