Please ensure Javascript is enabled for purposes of website accessibility

BP Writes Downs Up to $17.5 Billion in Assets

By Howard Smith – Jun 15, 2020 at 9:28AM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The energy giant sees the COVID-19 pandemic resulting in lower energy demand, and prices, for a sustained period.

British-based energy company BP (BP 1.06%) has reviewed its long-term strategy and lowered its assumptions for oil prices looking out to 2050. The company said it uses the new assumptions to "create a framework that seeks to ensure investments align with its strategy and add shareholder value."

BP now sees an average oil price of $55 per barrel between 2021 and 2050, and a natural gas average price of $2.90 per mmBTU. The company said its strategy adjustments due to the lowered price assumptions will result in post-tax asset impairment charges and exploration write-offs of between $13 billion and $17.5 billion in the second-quarter of 2020. BP expects to release its results on Aug. 4, 2020. 

deep sea oil rig against blue sky with gas flaring

Image source: Getty Images.

Pre-tax impairment charges of up to $11 billion for property, plant, and equipment are planned. As of March 31, 2020, the company's oil and gas properties had a total value of $88.6 billion. Its planned exploration intangible write-offs of up to $10 billion come out of total intangible exploration assets valued at $14.2 billion, as of the last quarterly report. 

The company said it revised its outlook due to the potential for sustained weaker demand from the COVID-19 pandemic having a longer lasting impact on the global economy. It sees recovery from the pandemic resulting in an accelerated transition away from fossil fuels "to a lower carbon economy and energy system." 

BP also recently told its employees that it was planning to cut 10,000 jobs, or 15% of its workforce, as it seeks to navigate the current difficult environment. 

Howard Smith has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

BP p.l.c. Stock Quote
BP p.l.c.
BP
$27.55 (1.06%) $0.29

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
327%
 
S&P 500 Returns
105%

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 09/27/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.