BP plc (NYSE:BP) is writing down $17.5 billion in assets in the second quarter and forecasting lower oil prices.
The oil company said Monday that it has revised its long-term price predictions and is lowering them and extending the period covered to 2050.
“These actions will lead to non-cash impairment charges and write-offs in the second quarter, estimated to be in an aggregate range of $13 billion to $17.5 billion post-tax,” BP said in a press release.
What Happened: The company has revised long-term price estimates. For Brent oil, the company estimates an average of around $55 per barrel and $2.90 per mmBtu for Henry Hub gas ($2020 real), from 2021-2050. BP has also revised its carbon prices for the period to 2050 at $100/teCO2 in 2030 ($2020 real).
The coronavirus pandemic drove the price of oil to less than $20 a barrel; it has since recovered and was trading around $38 a barrel at the time of publication.
Why It's Important: BP CEO Bernard Looney said in February that the company set out to become a net zero company by 2050 or sooner.
“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,” the CEO said in a statement.
On June 8, Looney announced 10,000 job cuts following a global slump in demand for oil due to the coronavirus crisis.
BP Price Action: BP shares were trading down 4.65% at $23.60 premarket Monday. The stock has a 52-week high of $42.70 and a 52-week low of $15.51.
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