In 2020, BP announced its ambition to become a net zero company “by 2050 or sooner.”
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BP Shares fell 4.3% on Tuesday after the company said it expected a writedown of up to $2 billion in the second quarter and warned that lower refining margins would weigh on its results.
In a statement Tuesday, the company said it expects weak refining margins and oil trading performance to weigh on second-quarter results, due July 30. The hit is estimated at $500 million to $700 million.
The energy company also expects to record post-tax asset impairments and contract provisions in the range of $1 billion to $2 billion in the second quarter. The hit includes costs related to BP's ongoing review of its Gelsenkirchen refinery in Germany.
BP said upstream production in the second quarter is expected to be “broadly flat” compared to the previous quarter, and the company also expects average results for gas marketing and trading.
According to Biraj Borkhataria, an analyst at RBC, the energy sector as a whole is underperforming “modestly,” adding that “there is some volatility here nonetheless, with stronger-than-expected upstream volumes being offset by weakness elsewhere.”
BP is facing a transition period after former CEO Bernard Looney stepped down from the role less than four years ago due to undisclosed personal relationships with colleagues before he became CEO. The company named Murray Auchincloss as permanent CEO in January.
The company aims to achieve at least $2 billion in cash cost savings by the end of 2026. Lower fuel margins and lower gas and oil prices hit BP's first-quarter results, leading to a decline in profits.
Last week, rival energy giant Shell also announced that it expects to record a post-tax impairment hit of up to $2 billion, primarily related to its factories in Singapore and Rotterdam, the Netherlands. It added that trading and optimization performance in the second quarter is expected to be lower than in the first quarter of 2024 “due to seasonality.”
