BP shares drop 3% after warning of up to $2 billion impairment, weak refining margins

In this article

BP in 2020 set out its ambition to become a net zero company “by 2050 or sooner.”
Matt Cardy | Getty Images News | Getty Images

BP shares dropped Tuesday after the firm flagged it expects to post an impairment of up to $2 billion in the second quarter and warned of lower refining margins weighing on its results.

Shares of BP were down 2.6% in early market trading at 8:39 a.m. London time.

In a Tuesday statement, the company said it anticipates weak refining margins and oil trading performance will weigh on its second-quarter results, due out on July 30. The hit is estimated between $500 million and $700 million.

The energy firm also expects to record post-tax asset impairments and contract provisions in the range of $1 billon to $2 billion in the second quarter. The hit includes charges relating to BP’s ongoing review of its Gelsenkirchen refinery in Germany.

Upstream production in the second quarter is now expected to be “broadly flat” compared with the previous quarter, BP said, adding it anticipates an average gas marketing and trading result.

The overall energy sector has “modestly” underperformed, said RBC analyst Biraj Borkhataria, adding that “nevertheless, there are some puts and takes here, with stronger than anticipated upstream volumes offset by weakness elsewhere.”

BP is facing a period of transition after former CEO Bernard Looney resigned less than four years in the post due to undisclosed personal relationships with colleagues before becoming chief executive. The company appointed Murray Auchincloss as permanent CEO in January.

The firm is targeting at least $2 billion in cash cost savings by the end of 2026. Weaker margin in fuels and lower gas and oil prices impacted BP’s results in the first quarter, leading to a drop in profit.

Last week, rival energy giant Shell similarly announced that it expects to record a post-tax impairment hit of up to $2 billion, mainly linked to its Singapore and Rotterdam, Netherlands, plants. It added that its second-quarter performance of trading and optimization in the core gas division is expected to come in below the first quarter of 2024 “due to seasonality.”

Products You May Like

Articles You May Like

Ambani’s wedding kicks off in India this weekend. Here’s who will be at the star-studded event
China’s imports unexpectedly drop in June, but exports beat forecasts
Inflation is causing financial stress: These 5 strategies can help you build a better budget
Here’s why Wells Fargo stock is down 7% despite the bank’s quarterly earnings beat
Biden could try to deliver on sweeping student loan forgiveness weeks before election

Leave a Reply

Your email address will not be published. Required fields are marked *