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BP takes $5bn hit over green energy transition
(Sharecast News) - Energy giant BP on Wednesday said it expected to take an impairment charge of $4bn - $5bn in the fourth quarter, mainly related to its energy transition businesses after it pivoted away from green alternatives to fossil fuels, adding that oil trading was expected to be weak. Group oil and gas production in the fourth quarter was expected to be broadly flat compared to the prior quarter, with production broadly flat in oil and lower in gas & low carbon energy as the average price of Brent crude declined to $63.73 a barrel in the fourth quarter, from $69.13 in the previous three months.
Last month BP announced that chief executive Murray Auchincloss was leaving with immediate effect to be replaced by Meg O'Neill, chief executive of Woodside, Australia's largest energy company. O'Neill will replace interim chief Carol Howle in April.
BP added that the impairments would not impact underlying replacement cost profit - the company's equivalent of net income. The company has pivoted away from greener energy to fossil fuels and early last year BP abandoned a target to develop 50 gigawatts of renewables.
The gas & low carbon energy segment was expected to take a hit of up to $300m, including changes in non-Henry Hub natural gas marker prices and the gas marketing and trading result was expected to be average.
Oil production operations were expected to be impacted by up to $400m, including the impact of the price lags on BP's production in the Gulf of Mexico and the UAE.
Reporting by Frank Prenesti for Sharecast.com
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