BP plc lost $6.3 billion in the second quarter, reflecting the landmark Macondo well settlement and a near-40% decline in oil prices from a year ago.

Excluding inventory changes and one-time items related to the Gulf of Mexico deepwater spill, earnings in 2Q2015 fell to $1.3 billion (18 cents/share), down 64% from a year ago. A $10.7 billion noncash impairment was related to Macondo settlements, bringing the total cumulative charges for the disaster to $54.6 billion and counting. BP also posted a $600 million loss for Libya operations.

Operational cash flow, however, improved sequentially to $6.3 billion from $1.8 billion but fell sharply from a year ago when cash flow was $8.23 billion. The latest period’s cash flow gave BP cover for its capital expenditures, dividend payments and the ability to reduce its total debt load. Revenue increased to $60.5 billion from first quarter revenues of $54.1 billion.

Earlier this month BP agreed to an $18.7 billion settlement with federal and state officials related to Macondo (see Daily GPI,July 2). The transaction, which still requires approval by U.S. courts early next year, doesn’t resolve all of the liabilities, but it provides a lot of clarity for the company to move forward, CEO Bob Dudley told investors during a conference call Tuesday.

“The numbers are huge, but we can now plan for the future,” he said. “That is a state we haven’t been in for five years.” BP also is shielded now from a potential takeover, he said, a rumor that has circulated in light of the environment and the company’s poor bottom line.

“As a result of the settlement in the U.S., it is actually less likely that someone would want to acquire BP and it is certainly not our intention to put the company up for sale,” the CEO said.

BP is digging in for the long haul, with no uplift expected in the near term for commodities. Management has a view that oil prices will be “lower for longer,” Dudley said, repeating comments he made three months ago.

“The external environment remains challenging but BP moved quickly in response. I am confident that positioning BP for a period of weaker prices is the right course to take.”

BP has tabled some final investment decisions and is retooling other projects to reduce costs. Projects now are being tested at a $60/bbl oil price, with a stress test of $40.

“The landscape is quite uncertain and will be for some time,” Dudley said. Acquisitions are always a possibility, however, and BP “continually scans and screens” opportunities worldwide.

There’s “no question” that the ongoing revamp is improving BP’s Lower 48 operations and making it more competitive, Dudley said. BP had begun to see more clarity in the U.S. operations earlier this year (see Daily GPI,April 28).

“So far, the kind of things we are doing is managing production wells better” and implementing artificial lift in the unconventional operations. BP also has increased its onshore rig count to 10 from only two at the end of 2014. Seven rigs are running in the Midcontinent, two are in the Haynesville Shale in East Texas and one is running in Wyoming.

“We’ve also seen an increase from drilling activity in the percentage of liquids, which is up…pushing 18%” of total output in the United States. Production across the Lower 48 is around 280,000 boe/d.

“We are pleased, but we are challenged with low prices now. The executive team that has come into that business has reduced the size of it, the number of people and made it much more efficient…We continue with the desire to be a more marketable, visible, onshore operator in the U.S.”

BP now has about 1,200 employees working in five states. “We think this is a real restructuring activity and we’ve taken it on to be competitive,” Dudley said. “We knew we weren’t” but the cost structures are falling and BP is becoming a bigger player.

Gilvary said Lower 48 costs have fallen 6% year/year, and the downward trend is expected to continue. “We have a new approach to the Lower 48, and we will see that as the next four or five quarters progress. We are handling the business in a very different way than we were before.”

As planned, natural gas is becoming an increasingly bigger part of the portfolio.

“We have just moved the portfolio past 50% in terms of production that is now gas versus oil, Dudley said. Many big oil projects already have ramped up, with large gas facilities sanctioned to begin by the end of the decade. By 2020, BP’s mix should be 55-60% gas.

“It’s a strategic shift,” Dudley said. BP long has been “clear” about carbon pricing and emissions. “Having that reduced carbon footprint is a good thing…But we’re not abandoning the oil industry…With carbon pricing, we have a view that…the world really does need framework to work with.” With energy efficiencies as a “big lever,” carbon pricing then could be used by the world to help solve the transition to lower carbon energy over many decades.

“Is it a strategic shift? I think so,” he said. “It’s a natural one with our portfolio and the projects we see ahead.”

That is the long-term view. Upstream profits slid into a ditch in 2Q2015, down by 94% from 2Q2014. And BP’s integrated business model again proved to be key in a time of low oil prices, with refinery segment profits jumping 75% year/year to $1.62 billion.

The ongoing distress in prices has prompted the London-based oil major to reduce more staff. Restructuring charges related to layoffs are expected to total about $1.5 billion by the end of this year, up from a December estimate of $1 billion.

“We will continue to identify more opportunities for simplification and efficiency,” Dudley said. The increase in restructuring charges “reflects a faster pace” of cost cutting. “Further gains” are expected as the year progresses. “We’re…well into restructuring costs in the upstream and plan to continue later this year…in some of our big centers around the world, Houston, some more in Aberdeen.”

With its financial profile taking on water since the Macondo well blowout five years ago, BP has sold almost $45 billion of assets in the last few years, and the selloff continues, with about $10 billion still set for disposal. That means more layoffs, CFO Brian Gilvary told analysts.

“You’re also seeing significant headcount reductions in upstream and downstream as we progress through the year and I think you’ll see more of that before we get to the end of the year,” Gilvary said. The upstream staff is about 8% smaller than it was in 2013, while corporate support staff is down 37%, he said.

Capex for 2015 have been reduced sharply from original plans put in place, in part on lower negotiated oilfield services costs, as well as efficiencies in the fields, Dudley said. In the first half of this year, operational expenses declined $1.7 billion year/year.

Capex in 2Q2015 was down 20% from a year ago to $4.7 billion. The capex forecast for the entire year now has been cut to less than $20 billion. BP invested $23 billion for capital projects in 2014, and initially had planned to spend $24-26 billion this year.

“This quarter isn’t quite as bad as the headline numbers suggest, although this quarter’s financial statement isn’t exactly the one that gets hung up on the refrigerator either,” wrote Motley Fool energy analyst Tyler Crowe. “BP is controlling what it can by cutting costs and lowering capital expenditures, but that can only help so much when the price for its primary revenue source has been cut in half. The biggest question going forward for BP is whether the cuts it’s making to capital expenditures will come back to bite it further down the road. Perhaps there will be some clues as to how these capital spending changes will shake out in the coming quarters.”

Royal Dutch Shell plc is set to deliver its quarterly results on Thursday, followed on Friday by ExxonMobil Corp. and Chevron Corp.