Posted On: 15-06-2020
Oil giant BP is expecting massive reductions to asset values during the second quarter of 2020 as a result of the combined hit of the oil price plunge and the COVID-19 pandemic. The oil major said that, as part of its strategy development, it was reviewing its portfolio and its capital development plans. BP stated that the COVID-19 pandemic would have an enduring impact on the global economy, with the potential for weaker demand for energy for a sustained period. As a result, BP’s management said in a statement on Monday that it had a growing expectation that the aftermath of the pandemic would accelerate the pace of transition to a lower-carbon economy and energy system so that their economies would be more resilient in the future. With that in mind, the company revised its long-term price assumptions, lowering them and extending the period covered to 2050 so that it was consistent with its ambition horizon. As part of its long-term strategic planning, and in the context of its continuing focus on capital discipline, BP is also reviewing its intent to develop some of its exploration intangible assets. According to BP, 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.