BP shares drop 3% after warning of as much as $2 billion impairment, weak refining margins

Jul 9, 2024 | blog

BP in 2020 set out its ambition to grow to be a internet zero firm “by 2050 or sooner.”
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BP shares dropped on Tuesday after the agency flagged it expects to publish an impairment of as much as $2 billion within the second quarter and warned of decrease refining margins weighing on its outcomes.

BP shares had been down 2.6% in early market buying and selling at 08:39 a.m. London time.

In a Tuesday assertion, the corporate mentioned it anticipates weak refining margins and oil buying and selling efficiency will weigh on its second-quarter outcomes, due out on 30 July. The hit is estimated between $500 million to $700 million.

The power agency additionally expects to file post-tax asset impairments and contract provisions within the vary of $1 billon to $2 billion within the second quarter. The hit consists of prices regarding BP’s ongoing evaluation of its Gelsenkirchen refinery in Germany.

Upstream manufacturing within the second quarter is now anticipated to be “broadly flat” in comparison with the earlier quarter, BP mentioned, including that it anticipates a median gasoline advertising and marketing and buying and selling consequence.

The total enegy sector has “modestly” underperformed, mentioned RBC analyst Biraj Borkhataria, including that “nevertheless, there are some puts and takes here, with stronger than anticipated upstream volumes offset by weakness elsewhere.”

BP is dealing with a interval of transition after former CEO Bernard Looney resigned lower than 4 years within the publish on account of undisclosed private relationships with colleagues earlier than changing into CEO. The firm appointed Murray Auchincloss as everlasting CEO in January.

The agency is focusing on no less than $2 billion in money price financial savings by the tip of 2026. Weaker margin in fuels and decrease gasoline and oil costs impacted BP’s ends in the primary quarter, resulting in a drop in revenue.

Last week, rival power large Shell equally introduced that it expects to file a post-tax impairment hit of as much as $2 billion, primarily linked to its Singapore and Rotterdam crops. It added that its second-quarter efficiency of buying and selling and optimization within the core gasoline division is anticipated to come back in under the primary quarter of 2024 “due to seasonality.”

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