BP to cut down assets by up to $17.5 billion
BP has announced it is to write down its assets by up to $17.5 billion (£14 billion) in the wake of coronavirus and the push to reduce carbon emissions, according to foreign media.
The UK-headquartered firm said it had revised its expectations of Brent crude prices over the next 30 years to an average of $55 a barrel to take into account falling demand for oil during the transition to net-zero by countries worldwide.
It has also reassessed the price of Henry Hub gas to $2.90 per million British Thermal Units (mmBtu).
BP said the review would lead to non-cash impairment charges and write-offs in the second quarter of this year, estimated at $13 billion to $17.5 billion after tax.
CEO Bernard Looney said the price forecasts took into account the Paris Agreement goal of limited global warming to below 2C a year and the plunge in oil prices due to fallen demand during Covid-19. The firm last week announced it would cut 10,000 jobs worldwide.
He said: “In February, we set out to become a net-zero company by 2050 or sooner. 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.
BP said the review of its intangible assets assessments was ongoing but estimated that non-cash, pre-tax impairment charges against property, plant & equipment (PP&E) would be in the range of $8 billion to $11 billion, and write-offs of exploration intangibles in the range of $8 billion to $10 billion.
It estimated its aggregate second-quarter non-cash, post-tax PP&E impairment charges, and exploration intangible write-offs at $13-17.5 billion.