GAAP and IFRS

BP Faces $17.5B Q2 Hit

The oil giant lowered its oil price expectations through 2050 due to the COVID-19 pandemic.
BP Faces $17.5B Q2 Hit

BP is writing down $17.5 billion in assets in the second quarter and forecasting lower oil prices.

The oil company said Monday that it has revised its long-term price predictions and is lowering them and extending the period covered to 2050.

Drive Business Strategy and Growth

Drive Business Strategy and Growth

Learn how NetSuite Financial Management allows you to quickly and easily model what-if scenarios and generate reports.

“These actions will lead to non-cash impairment charges and write-offs in the second quarter, estimated to be in an aggregate range of $13 billion to $17.5 billion post-tax,” BP said in a press release.

The company has revised long-term price estimates. For Brent oil, the company estimates an average of around $55 per barrel and $2.90 per mmBtu for Henry Hub gas ($2020 real), from 2021-2050. BP has also revised its carbon prices for the period to 2050 at $100/teCO2 in 2030 ($2020 real).

The coronavirus pandemic drove the price of oil to less than $20 a barrel; it has since recovered and was trading around $38 a barrel at the time of publication.

BP CEO Bernard Looney said in February that the company set out to become a net-zero carbon company by 2050 or sooner.

“As part of that process, we have been reviewing our price assumptions over a longer horizon. That work has been informed by the COVID-19 pandemic, which increasingly looks as if it will have an enduring economic impact,” the CEO said in a statement.

“Since then we have been in action, developing our strategy to become a more diversified, resilient, and lower carbon company. As part of that process, we have been reviewing our price assumptions over a longer horizon,” Looney added.

On June 8, Looney announced 10,000 job cuts following a global slump in demand for oil due to the coronavirus crisis.

BP shares were trading down 4.65% at $23.60 premarket Monday. The stock has a 52-week high of $42.70 and a 52-week low of $15.51.

This story originally appeared on Benzinga.

© 2020 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.

Ben Stansall/AF