Page 4 - EurOil Week 31

EurOil COMMENTARY EurOil

BP announces clean energy pivot

after record Q2 losses

BP has gone further than any other majors in committing to transformation in

the face of the energy transition.

UK BP has announced an historic shift in its business BP’s upstream business sank to a $8.5bn
strategy that calls for a 40% reduction in its fossil pre-tax underlying RC loss in the second quar-
WHAT: fuel output over the next decade, along with a ter, compared with a $3.4bn profit in the same
BP has unveiled its 2050 tenfold increase in its clean energy investments. period last year. Average realised liquids prices
net-zero strategy, which BP’s long-awaited strategy for becoming a were 64% lower year on year, while gas prices
calls for a 40% cut in its net-zero emissions company by 2050 was pre- slumped 24%. Production was also down 3.8% at
oil and gas output over sented by CEO Bernard Looney on August 4, 2.53mn barrels of oil equivalent per day (boepd).
the next decade. after the UK major announced a record loss for “These headline results have been driven by
the second quarter and a 50% cut to its dividend. another very challenging quarter, but also by the
WHY: deliberate steps we have taken as we continue to
The UK major posted Record losses reimagine energy and reinvent BP,” Looney said
record losses in the The company reported an underlying replace- in a statement. “In particular, our reset of long-
second quarter, after ment cost (RC) loss of $6.7bn for the three- term price assumptions and the related impair-
slashing its long-term month period, versus a $791mn profit in the ment and exploration write-off charges had a
forecasts for fossil fuel previous quarter and an income of $2.8bn in the major impact.”
prices. same period last year. Underneath these factors, though, Looney
Like all international oil companies (IOCs), said that “performance remained resilient,”
WHAT NEXT: BP took a hammering from the collapse in oil pointing to the $4.83bn in operating cash flow
BP must simultaneously demand and prices brought about by the coro- BP generated in the period. Cash flow totalled
provide shareholders navirus (COVID-19) pandemic. It also suffered $8.2bn in 2019’s second quarter.
with sufficient reward $6.5bn in post-tax exploration write-offs, after BP also managed to shave $10.5bn off its net
while also delivering on a slashing its long-term forecasts for oil and gas debt over the three months, bringing it down
costly transition to clean prices in light of the current crisis and the energy to $40.9bn. No further reductions to capital
energy. transition away from fossil fuels picking up pace. expenditure were announced, beyond the 25%
BP’s net loss amounted to $16.8bn for three cut announced in April to $12bn.
months, starkly contrasting with a $1.8bn profit Following similar moves by other European
a year earlier. The reversal came on the back of majors, BP also halved its dividend to $0.0525
$10.9bn in post-tax impairments, again reflect- per share. This was a less aggressive cut than
ing its lower forecasts. Royal Dutch Shell, which reduced its dividend

P4 www. NEWSBASE .com Week 31 06•August•2020