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Oil major BP on Monday said it was taking up to $17.5 billion in charges as it lowers its assumptions for the fossil fuels it sells.
BP said a charge will range from $13 billion to $17.5 billion in the second quarter, citing both its review of assumptions as it seeks to become net-zero on carbon emissions by 2050 as well as the impact of COVID-19 on the global economy.
“We have reset our price outlook to reflect that impact and the likelihood of greater efforts to ‘build back better’ towards a Paris-consistent world. We are also reviewing our development plans,” said CEO Bernard Looney in a statement.
BP said the pandemic is having an enduring impact on the global economy, with the potential for weaker demand for energy for a sustained period.
BP said it’s now forecasting a Brent oil price BRN00, -2.76% for the long term of $55, which is down from its previous estimate of $70.
BP’s estimate for crude is still well above August futures, which traded at $37.40 on Monday morning.
It’s forecasting a natural gas price NG00, -0.75% of $2.90 per mmBtu for Henry Hub gas, down from $4.
BP said those prices are “broadly in line with a range of transition paths consistent with the Paris climate goals.”
BP said it currently estimates that non-cash, pre-tax impairment charges against property, plant & equipment in the range of $8 billion to $11 billion, and write-offs of exploration intangibles in the range of $8 billion to $10 billion.
At the end of the first quarter, BP’s property, plant & equipment was valued at $88.6 billion in the oil and gas properties and intangible assets were $14.2 billion in the exploration business.
BP shares opened 5% lower in London.
