BP cut its dividend for the first time in a decade and reported a huge quarterly loss as the coronavirus pandemic forced it to write down the value of assets.

The energy giant said its second-quarter dividend would halve to 5.25 cents a share, compared to 10.5 cents in the first quarter. It traditionally generates the largest dividend payment among the big blue chip FTSE 100 companies.

BP also announced it lost $16.8 billion in the second quarter, included a net post-tax charge of $10.9 billion for non-operating items. On an adjusted basis, it lost $6.7 billion compared with a $2.8 billion profit a year ago.

“These headline results have been driven by another very challenging quarter,” CEO Bernard Looney said in a news release. In particular, he added, “our reset of long-term price assumptions and the related impairment and exploration write-off charges had a major impact.”

Exploration write-offs totaled $6.5 billion, BP said, “principally resulting from a review of BP’s long-term strategic plans and revisions to long-term price assumptions, combined with the impact of lower oil and gas prices and very weak refining margins, reduced oil and gas production, and much lower demand for fuels and lubricants.”

BP shares, however, rose 7.5% to $23.74 in New York trading Tuesday as the company also said it was planning to “pivot” from being a traditional oil company to an “integrated energy company.”

The plan marks “one of the most dramatic energy-transition plans among [BP’s] oil major peers at a time of deep crisis for the industry,” The Wall Street Journal said.

According to BP, resetting its dividend at a lower level will enable it to invest in the opportunities arising from the energy transition. The company is aiming to increase its low-carbon investments to $5 billion a year by 2030, from around $500 million, at the same time as seeing its oil and gas production fall by 40% from 2019 levels.

But BBC News noted that the dividend cut is “a particularly hard blow for U.K. pension funds and the army of pensioner investors who rely on the payouts.”

(Photo by BEN STANSALL/AFP via Getty Images)

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