BP Shares Plummet on $2 Billion Impairment Warning

Energy News Beat

Shares in BP fell by as much as four percent this morning after it warned it was expected to post an impairment of up to $2bn (1.6bn) and was operating under “significantly” lower refining margins.

The FTSE 100 oil major, which in April surprised investors with a better-than-expected oil and gas trading performance in the first three months of the year, maintained much of its momentum in the second quarter, but said that “onerous contract provisions” meant it was setting aside up between between $1bn (£780m) and $2bn (£1.6bn).

BP shares were down 3.5 percent in early market trading at 9 30am BST.

In a trading update published this morning, the company said upstream production was flat compared to the prior quarter, and realised oil prices had a favourable impact on its bottom line.

However, BP was still hit by “significantly” lower realised refining margins—which had been unexpectedly healthy in the first quarter—due to narrower North American heavy crude oil differentials and weaker middle distillate margins.

The energy giant expects these to have an adverse impact of up to $0.7bn (£0.55bn).

BP also said its second-quarter results expected on July 30 will include the post-tax adverse adjustments from the firm’s ongoing review of its Gelsenkirchen refinery in Germany.

Analysts at Jeffries said the trading update should result in an earnings downgrade of approximately 20 percent, “mainly driven by a lower trading contribution” and the negative revisions in refining.

Source: Oilprice.com

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The post BP Shares Plummet on $2 Billion Impairment Warning appeared first on Energy News Beat.




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