LONDON, Jan 14 (Reuters) - BP flagged in a trading statement on Wednesday that it expects to book $4 billion to $5 billion in impairments in the fourth quarter, mainly related to its energy transition
BP Anticipates Up to $5 Billion Impairments in Low-Carbon Ventures
BP's Financial Outlook and Strategic Shift
By Shadia Nasralla and Stephanie Kelly
Impairments and Earnings Impact
LONDON, Jan 14 (Reuters) - Oil major BP expects to book $4 billion to $5 billion in fourth-quarter impairments, mainly tied to its low-carbon energy businesses, as it redirects spending to oil and gas to boost returns under new leadership including Chair Albert Manifold.
CEO Transition and Management Changes
The British company said in a trading statement on Wednesday ahead of results on February 10 that the impairments are excluded from underlying replacement cost profit, its version of net income. A spokesperson declined to say which projects were affected.
Divestments and Debt Management
New CEO Meg O'Neill will replace interim chief Carol Howle in April after Murray Auchincloss's abrupt exit last month as BP sought to improve its profitability and share performance which has lagged competitors like Shell in recent years.
BP CUTS BACK ON ENERGY TRANSITION
BP about year ago slashed its annual spending on energy transition businesses from $7 billion to a maximum of $2 billion as it embarked on a major strategy shift back to oil and gas.
It wants to sell its stake in solar power group Lightsource bp, has spun off its offshore wind business into joint venture JERA Nex BP and has abandoned plans to build a biofuels plant in Amsterdam.
Jera Nex BP was not among winners at a British offshore wind power contract auction on Wednesday after having committed hundreds of millions of dollars in 2021 with German regional utility EnBW to UK seabed rights. Jera Nex BP did not immediately respond to a request for comment.
LOWER OIL PRICES, TRADING TO WEIGH ON EARNINGS
BP warned that weaker oil trading and falling prices will weigh on fourth-quarter earnings.
It expects lower oil prices to reduce quarterly earnings by $200 million to $400 million while weaker gas prices could trim another $100 million to $300 million. European benchmark gas prices fell 9% in the period, and Brent crude < averaged $63.73 a barrel, down from $69.13 in the third quarter, as oversupply fears hit markets.
BP shares were down 1.6% by 0931 GMT versus a 0.5% dip in a broader index of European energy companies.
NET DEBT FALLING DUE TO DIVESTMENTS
BP expects net debt to have dropped to $22 billion–$23 billion by the end of 2025 from $26.1 billion in the third quarter, helped by divestments of about $5.3 billion, above earlier guidance. The figure excludes $6 billion from selling a majority stake in its Castrol lubricants unit. BP aims to cut debt to $14 billion–$18 billion by 2027.
Refining margins slipped to $15.20 a barrel from $15.80 in the previous quarter. BP’s 440,000-barrel-per-day Whiting refinery in the U.S. suffered outages after an October fire, adding to earlier disruptions from flooding and a major 2024 outage.
BP also raised its expected tax rate for 2025 to 42% from 40%.
(Reporting by Shadia Nasralla and Stephanie Kelly; Editing by Jan Harvey and Emelia Sithole-Matarise)
