Shares in BP declined over 1% early on Tuesday (26 July), after the oil giant revealed its underlying profit in the second quarter almost halved, although it added it was finally drawing a line under the Deepwater Horizon disaster.

In the three months to the end of June, the FTSE 100 giant posted a 45% year-on-year decline in underlying replacement cost profit to $720m (£550.8m, €653.9m). The figure was lower than the $729m analysts' forecast but higher than the $532m recorded in the previous three months.

More business news

Underlying pre-tax replacement cost profits from the group's downstream business, which incldues refining and marketing operations, were $1.5bn, compared with a loss of $1.9bn a year ago. Meanwhile, the upstream business – which comprises the exploration and production divisions – swung from a $747m first quarter loss to a profit of $29m. The figure, however, was way lower than the $494m recorded in the corresponding period last year.

However, there was better news for the London-listed group as the saga surrounding the 2010 disaster on the Deepwater Horizon oil rig in the Gulf of Mexico, which killed 11 people and kick-started the worst oil disaster in US history, appears to be approaching its end.

Earlier this month, BP announced the amount spent on expenses and compensation for the disaster will amount to a total of $61.2bn, which is over half of the company's market capitalisation. The figure includes a $5.2bn charge BP booked in the second quarter of the year after reaching individual settlements with the US authorities, the tens of thousands of people affected by the spill and a number of investors.

Group chief executive Bob Dudley said he was "very pleased to have finally drawn a line under the material liabilities for Deepwater Horizon", adding he would set out a "much stronger outlook for BP".

"As we look forward we expect the external environment to remain challenging, but we have a strong pipeline of new projects which will add 500,000 barrels of oil equivalent a day of new production capacity by the end of next year," he said.

Richard Hunter, head of research at Wilson King Investment Management, said that, while oil prices remained short of the $60-a-barrel level BP requires to sustain investment in the long-run, consigning the Deepwater disaster to the history books could prove a turning point for the company.

"The epic battles which BP has faced over recent times have been testing for the company and shareholders alike," he said.

"Whether this update marks a new chapter for a revitalised company remains to be seen, but the reaction of the share price has shown that this may well be the case. Over the last year BP has added 12%, as compared to a 2% hike for the wider FTSE100, while the market consensus of the shares as a buy also indicates confidence for the future of the oil behemoth."