Wall Street stocks have mostly…
After stopping to accept bitcoin…
BP has warned it will book pre-tax writeoffs on assets and exploration to the tune of $16-21 billion in its second-quarter results as it revised down its long-term oil price assumption and launched a review into its exploration plans.
The review and the revision that will lead to the writeoffs follow the company’s aggressive pursuit of net zero goals for 2050.
BP now expects the long-term average price for Brent crude to be $55 per barrel over the period between 2021 and 2050, and it will base its investment appraisal plans on this price, the company said in a press release today.
“However, bp currently estimates that non-cash, pre-tax impairment charges against property, plant & equipment (PP&E) in the range of $8 billion to $11 billion, and write-offs of exploration intangibles in the range of $8 billion to $10 billion, will be reported in its second-quarter 2020 results,” the supermajor said.
Post-tax impairments and writeoffs will be in the range of $13 to $17.5 billion. For context, BP said that at the end of the first quarter, its total properties, plants, and equipment—the basis for the writeoffs—totalled $130.2 billion in value, of which $88.6 billion in oil and gas properties. Exploration intangibles totalled $14.2 billion.
BP, like its European peers, has been cutting spending on its core business and increasing investments in alternative energy, driven by the new clean energy goals but also by the coronavirus pandemic, which will have a lasting effect on the industry.
“In February we set out to become a net zero company by 2050 or sooner,” BP chief executive Bernard Looney said in a LinkedIn post. “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. That work has been informed by the COVID-19 pandemic, which increasingly looks as if it will have an enduring economic impact.”
By Irina Slav for Oilprice.com
More Top Reads From Oilprice.com:
Irina is a writer for Oilprice.com with over a decade of experience writing on the oil and gas industry.