It came as no surprise to analysts that the second-quarter earnings season was more brutal than the first for the integrated oil and gas majors as the impacts of the COVID-19 pandemic prompted not only a wave of additional spending cuts but also hefty write-downs and dividend cuts.

Typically oil companies do all they can to protect dividends in times of financial hardship, but tough times can force difficult decisions.

BP PLC slashed its second-quarter payout to shareholders by 50% to 5.25 cents per quarter, as earnings swung to a $16.85 billion loss during the period. The company had not reduced its dividend since the Deepwater Horizon oil spill in 2010. Feeling the impact of the oil price crash, competitors Eni SpA and Royal Dutch Shell PLC also cut their dividends. It was Shell's first dividend cut in more than 70 years.

Many supermajors also took massive impairments for the second quarter after throttling back their medium-term crude price outlooks. BP booked a second-quarter posttax charge of $10.9 billion for non-operating items and a posttax impairment of $6.5 billion on upstream exploration assets. Shell reported a posttax impairment charge of $16.8 billion.

"We view these most recent second-quarter write-downs as part of the bigger, structural issues supermajors face. These can be a short-term symptom of long-term issues — specifically lower prices," according to an Aug. 3 report from S&P Global Ratings.

The impairments are indicative of more than just adjusting to lower price decks and accounting technicalities, analysts said. They are also due to a changing landscape the oil majors must adapt to — dealing with stranded assets as they try to reposition themselves for a lower-carbon future.

"Large write-downs can imply capital was misallocated. This raises questions about earlier strategic decision making and investments, although the sector outlook has also shifted since some of these original investment decisions," Ratings wrote.

In the last few years, investors have been pushing large energy companies to reduce emissions and take more serious action on climate change. Many have responded by beginning to diversify and decarbonize their portfolios, turning to natural gas, electricity and renewables to meet self-imposed emissions reductions ambitions.

During the second quarter, most of the European majors said they are progressing with, if not accelerating plans to address the energy transition. BP said Aug. 4 that it will hasten its evolution into a broader energy company by slashing oil production by 40% in the next 10 years. BP will focus on building a portfolio in low-carbon energy and electricity, including renewable energy, and intends to increase its annual low carbon investment tenfold in the next 10 years to about $5 billion a year.

Similarly, TOTAL SE is accelerating the pace of its move to become a wider energy company by selling off upstream assets where the cost of production is much higher than oil prices, executives said during the oil major's July 30 second-quarter earnings call.

"Investors are ever more focused on what climate change means for both the emissions and the valuation of their portfolio," Andrew Grant, head of oil and gas at the Carbon Tracker Initiative, said in an Aug. 4 email.

Meanwhile, several European majors, including BP, Total, Shell and Norway's Equinor ASA reported second-quarter earnings that were underpinned by a very strong performance from their respective trading units. Shell used the crude oil market volatility and market contango this spring, leveraging its massive infrastructure around the world to generate revenue from marketing its own energy products.

To protect its dividend at all costs and halt the accumulation of debt, Exxon Mobil Corp. disclosed during its second-quarter earnings release that it will make further cuts to its operations and spending in 2021 and beyond, which could include jobs losses, after posting a second straight quarterly loss amid fallout from the COVID-19 pandemic and the unprecedented oil price crash.

"While this [spending cut] goes against the Exxon philosophy of investing counter-cyclically, we believe it is the company's best course of action," Jefferies analyst Jason Gammel wrote in a Aug. 3 research note.

Chevron Corp. endured the second quarter better than expected, and analysts still say the company will have the strongest balance sheet across the sector by year's end even after the company's pending acquisition of producer Noble Energy, Inc.

"Chevron's flexibility in capital spending and continued operating cost reductions, combined with a recovery in commodity prices, should reduce negative free cash flow going forward and enable the company to maintain its balance sheet strength relative to its major oil company peers," Moody's Senior Vice President Pete Speer said in an email.

Chevron wrote down a total of $5.4 billion in the second quarter due in part to weaker commodity price expectations, but the company also incurred $780 million in severance costs, it said.