BP warns over hit of up to £1.6bn, sending shares lower
The oil firm is expecting a second quarter impairment charge of between a billion and 2 billion US dollars (£781 million to £1.6 billion).
Your support helps us to tell the story
From reproductive rights to climate change to Big Tech, The Independent is on the ground when the story is developing. Whether it's investigating the financials of Elon Musk's pro-Trump PAC or producing our latest documentary, 'The A Word', which shines a light on the American women fighting for reproductive rights, we know how important it is to parse out the facts from the messaging.
At such a critical moment in US history, we need reporters on the ground. Your donation allows us to keep sending journalists to speak to both sides of the story.
The Independent is trusted by Americans across the entire political spectrum. And unlike many other quality news outlets, we choose not to lock Americans out of our reporting and analysis with paywalls. We believe quality journalism should be available to everyone, paid for by those who can afford it.
Your support makes all the difference.Oil giant BP’s shares have come under pressure after it warned of an impairment charge of up to 2 billion US dollars (£1.6 billion) in its second quarter.
The group said it is bracing for a hit of between a billion and 2 billion US dollars (£781 million to £1.6 billion), relating to “post-tax asset impairments and associated onerous contract provisions”.
This includes a blow from previously announced moves to review its refining operations in Germany from 2025.
BP added that oil trading earnings will also be knocked by lower refining margins, which will impact second quarter results by between 500 million and 700 million US dollars (£391 million to £547 million).
BP’s focus has been a little scattergun of late, but it’s likely to remain an important part of the energy mix for some time to come
Shares in the FTSE 100 firm fell more than 3% in early trading on Tuesday.
In its update, BP also said that upstream production – BP’s activities in oil and natural gas exploration as well as low-carbon energy – is expected to be broadly flat quarter-on-quarter.
It had previously expected a slight fall.
The figures follow a warning from rival Shell last week over a hit of up to 2 billion US dollars (£1.6 billion) after it suspended construction work on one of Europe’s largest planned biofuel plants and sold a refinery in Singapore.
Jefferies analysts said they expect BP’s latest update to lead to an earnings downgrade of around 20% for the second quarter.
But Derren Nathan, head of equity research at Hargreaves Lansdown, said BP would be supported by rising oil prices.
The firm said the cost of crude averaged 84.97 US dollars per barrel in the second quarter, up from 83.16 US dollars in the previous three months.
Mr Nathan said: “BP’s focus has been a little scattergun of late, but it’s likely to remain an important part of the energy mix for some time to come.
“It still has one eye on the energy transition, and there appears to be little downward pressure on the oil price in the immediate future.
“This should keep both cash flow and generous distributions to investors flowing.”