BP expects loss of up to $2 billion

BP shares fell on Tuesday after the company said it expects to book a loss of up to $2 billion in the second quarter and warned lower refining margins will affect its results.

BP shares were down 2.6% in morning trading in London. In the U.S., the decline was just over 4% in afternoon trading.

In a statement on Tuesday, the company said it expects weak refining margins and a weaker performance in oil trading to affect its second-quarter results, which will be released on July 30. The impact of that loss is estimated at $500 million to $700 million.

BP

$32.43

-$0.12

-0.37%

Capital Structure

Market Cap

86.4B

Enterpr. Val.

117.2B

Valuation

P/E

12.6

P/S

0.4

Open $32.61

Day range $32.38 - $32.81

52 week range $30.67 - $40.84

The energy company also expects to book asset and reserve write-downs of $1 billion to $2 billion in the second quarter. This loss includes charges related to the ongoing review of the Gelsenkirchen refinery in Germany.

Production in the second quarter should be "roughly flat" compared with the previous quarter, BP $BP-0.4%said , and it also expects an average result in natural gas sales and trading.

Overall, the energy sector is "slightly" underperforming, RBC analyst Biraj Borkhataria said, adding that "however, there are some headwinds, with higher-than-expected volumes in the upstream segment being offset by weakness elsewhere".

BP is facing a period of transition following the resignation of former CEO Bernard Looney after less than four years in the job due to an illicit personal relationship with colleagues before taking the CEO post. The company appointed Murray Auchincloss as permanent CEO in January.

The company aims to achieve cash cost savings of at least $2 billion by the end of 2026. Weaker fuel margins and lower gas and oil prices impacted BP's first-quarter results, leading to a drop in profit.

Also last week, rival energy giant Shell said it expects to book a revaluation loss of up to $2 billion, mainly related to its plants in Singapore and Rotterdam in the Netherlands. It also added that its trading and optimisation result in its core gas segment in the second quarter is likely to be lower than in the first quarter of 2024 "due to seasonality".

Source: CNBC

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