BP to take up to $2bn in impairments in Q2, sees flat production

9th Jul 2024 07:04

(Sharecast News) - BP said it would take a hit of up to $2bn in the second quarter relating to asset impairments along with a hit to margins and lower profits from oil trading.

The writedown includes charges relating to the ongoing review of its Gelsenkirchen refinery in Germany, BP said on Tuesday, after announcing in March that it planned to cut crude oil processing capacity at the plant by about a third from next year 2025, due to weaker demand forecasts.

"Significantly lower" realised refining margins would slice $500 - $700m off earnings, mainly relating to weaker middle distillate margins and narrower North American heavy crude oil differentials, and a higher level of turnaround activity.

The oil and gas giant also forecast flat upstream production in the second quarter, while its gas marketing and trading result was also expected to be average following a strong result in the first quarter.

Upstream production in the second quarter is now expected to be broadly flat compared to the prior quarter, with production broadly flat in oil production & operations and slightly lower in gas & low carbon energy.

BP's announcement comes after rival Shell last week also warned of second-quarter non-cash impairments of up to $2bn, relating to the sale of its chemicals plant in Singapore and a pause in construction at a biofuel plant in the Netherlands.

Reporting by Frank Prenesti for Sharecast.com